to provide for the taxation of incomes and matters connected therewith.

[1st April, 1966]

Act 32 of 1967,

Act 23 of 1968,

Act 11 of 1969,

Act 26 of 1970,

Act 27 of 1970,

Act 17 of 1971,

Act 16 of 1972,

Act 11 of 1973,

Act 14 of 1973,

Act 46 of 1973,

Act 11 of 1974,

Act 11 of 1975,

Act 14 of 1976,

Act 9 of 1977,

Act 9 of 1978,

Act 10 of 1979,

Act 19 of 1979,

Act 6 of 1980,

Act 10 of 1981,

Act 13 of 1981,

Act 12 of 1982,

Act 21 of 1982,

Act 11 of 1984,

Act 11 of 1985,

Act 8 of 1986,

Act 14 of 1987,

Act 17 of 1988,

Act 28 of 1988,

Act 33 of 1989,

Act 15 of 1990,

Act 29 of 1990,

Act 12 of 1991,

Act 11 of 1992,

Act 4 of 1993,

Act 13 of 1994,

Act 14 of 1994,

Act 2 of 1995,

Act 27 of 1995,

Act 7 of 1996,

Act 3 of 1997,

Act 9 of 1998,

Act 6 of 1999,

Act 4 of 2000,

Act 1 of 2001,

Act 8 of 2001,

Act 3 of 2002,

Act 3 of 2003,

Act 1 of 2004,

Act 1 of 2005,

Act 7 of 2006,

Act 4 of 2007,

Act 1 of 2008,

Act 1 of 2009,

Act 27 of 2009,

Act 49 of 2010,

Act 27 of 2011,

Act 10 of 2012,

Act 18 of 2013,

Act 7 of 2014.

[General Note— (1) Section 29 of the Act 6 of 1999 deleted the words "handicapped person" wherever they appeared and substituted them by the words "person with disability" w.e.f. 1 April 1999.

(2) Section 12 of the Act 4 of 2007 deleted the words "section 23 of the Mines and Minerals Act" wherever they appeared and substituted them by the words "section 25 of the Mines and Minerals Act.

(3) Section 13(a) of the Act 1 of 2009 deleted the words "Mines and Minerals Act" wherever they appeared and substituted them by the words "Mines and Minerals Development Act 2008".

Section 13(b) of the Act 1 of 2009 deleted the words "Small Enterprises Development Act" and substituted them by the words "Zambia Development Agency Act, 2006".

(4) Act 27 of 2009 deleted "charities", "charitable institution", and "charitiable institutions", wherever they appeared and substituted them with "public benefit organisation". .

(5) Section 7 of the Act 49 of 2010 deleted the words “Direct Taxes Division” wherever they appeared and substituted them by the words “Domestic Taxes Division”.]

PART IPRELIMINARY AND INTERPRETATION

1. Short title

This Act may be cited as the Income Tax Act.

2. Interpretation

(1) In this Act, unless the context otherwise requires—

"agro-processing" means subjecting any farming produce produced in Zambia to any process which materially changes the farming produce in substance, character or appearance thereby making it a food product, but does not include—

(a) processing of that farming produce into alcoholic and non-alcoholic beverages, sugar crystals, flour or maize meal; or

(b) further or additional processing of the farming produce by a third party;

“assessable income” means the amount of a person's income liable to tax which may be included in an assessment and which remains after allowing the deductions, to which that person is entitled under the provisions of this Act;

“assessment” means the determination of an amount of tax which a person shall be liable to pay under the provisions of this Act;

“Authority” means the Zambia Revenue Authority established under the Zambia Revenue Authority Act;

“base metal” means a non-precious metal that is either common or more chemically active, or both common and chemically active and includes iron, copper, nickel, aluminium, lead, zinc, tin, magnesium, cobalt, manganese, scandium, vanadium and chromium;

“effective shareholder”, in relation to a company, means a person who is the beneficial owner of or able to control, either alone or with the nominees of that person, five per centum or more of the issued share capital of or voting powers in such a company;

“emolument” means any salary, wage, overtime or leave pay, commission, fee, bonus, gratuity, benefit, advantage (whether or not that advantage is capable of being turned into money or money's worth), allowance, including inducement allowance, pension or annuity, paid, given, or granted in respect of any employment or office, wherever engaged in or held;

“employee”, in relation to an employer, means any individual who is paid, given or granted any emolument by that employer;

“employer”, in relation to an employee, means any person who or any partnership which pays, gives or grants any emoluments to that employee;

“farming” means any husbandry, pastoral, poultry, fish rearing, or agricultural activity and but excludes the letting of any property for any such purpose;

(i) the term of the lease, including any period under an option to renew, is equal to or exceeds seventy-five per centum of the effective life of the leased implements, plants or machinery;

(ii) the lessee has an option to purchase the implements, plants or machinery at the expiration of the lease for a fixed or determinable price;

(iii) the estimated residual value of the implements, plant or machinery at the expiration of the lease term is less than twenty-five per centum of its fair market value at the commencement of the lease; or

(iv) the lessor does not retain the risks and rewards of ownership;

[Ins by s 2(d) of Act 4 of 2007 w.e.f. 1 April 200720; am by s 2(b) of Act 1 of 2008 w.e.f. 1 April 200821.]

“financial institution” means a person that holds a financial institution's licence granted under section 10 of the Banking and Financial Services Act;

“hydro and thermo power generation" means the production of electrical energy using physical and non-physical sources of energy such as moving water, petroleum, coal, biomass and any other source of energy except wood;

“local authority” means a City Council, District Council, Municipal Council or any other authority recognised as such under the Local Government Act.

“loss”, in relation to gains or profits, means the loss computed in like manner as gains or profits;

“lump sum payment” means—

(a) in relation to a beneficiary who was employed within the Republic throughout the period during which contributions were made, an amount equal to the terminal benefit received by him;

(b) in relation to a beneficiary who was not so employed, an amount that bears the same proportion to the terminal benefit received by him as the period of his employment within the Republic for which contributions were made bears to the total period of his employment for which contributions were made; and

(c) in relation to a beneficiary who is employed on pensionable terms, any amount received or accrued which is paid or payable by an employer upon cessation of employment, by way of compensation for leave due but not taken.

“management or consultant fee” means a payment in any form, other than an emolument, for or in respect of any creation, design, development, installation and maintenance of any information technology or solution, programme or system, administrative, consultative, managerial, technical, or any other service of a like nature;

“manufacturer” means a person carrying on the business of manufacturing;

“manufacturing” means subjecting any physical matter to any process which materially changes such material in substance, character or appearance, thereby making it an article after such process, and includes the assembly of motor vehicles and such other processes as the Commissioner-General may determine to be of a similar nature;

“mineral” has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

[Subs by s 2(a) of Act 7 of 2014 w.e.f. 1 January 2015.]

"mineral processing" means the practice of beneficiating or liberating valuable minerals from their ores, concentrates, or any semi-processed substance belonging to or purchased from another person;

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

“mining operations” has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

(c) a person who holds shares in a company directly or indirectly on behalf of the individual; or

(d) a person who can be required to exercise or a person who can require the exercise of voting powers in the affairs of a company in accordance with directions of the individual;

unless the Commissioner-General determines that the spouse, child or other person is a person who can at all times exercise or require the exercise of voting powers in the affairs of the company otherwise than in accordance with the directions of the individual;

“non-traditional product” anything produced or manufactured in the Republic, excluding—

(a) minerals;

(b) electricity;

(c) services; or

(d) cotton lint exported without an export permit from the Minister responsible for commerce, trade and industry;

"property loan stock company" means a company listed on the Lusaka Stock Exchange which is involved in real estate investment and development and has a capital structure that consists of property linked units;

(a) any operations for the purpose of searching for mineral deposits; or

(b) any operations for the purpose of defining the extent and determining the value of a mineral deposit;

"public benefit activity" means an activity listed in the Tenth Schedule to this Act and any other activity determined by the Minister, by notice in the Gazette, to be of a benevolent nature having regard to the needs, interest and well-being of the general public;

“public entertainment fee” means a payment in any form other than an emolument to, on behalf of, or in respect of, any person or persons in partnership, including theatre, motion picture, radio or television artists, musicians, athletes or sports persons, in respect of those persons' personal activities in any entertainment, competition or similar activity within the Republic;

“registered insurer” means an insurer registered under Part II of the Insurance Act;

“retirement age” means the age specified in the rules of an approved fund as the age of retirement or, if no age is specified in the rules, fifty-five years of age;

“royalty” means a payment in any form received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films and tapes for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience;

“rural area” means any area which is not an area declared or deemed to have been declared an area of any city or municipality or township under the Local Government Act;

“rural enterprise” means—

(a) a manufacturing business which commenced on or after the 1st April, 1976;

(b) a hotel, motel or lodge which commenced on or after the 1st April, 1981; and which is located in a rural area.

“services” means any services provided in the normal course of business by a person engaged in any business activity specified in the Third Schedule;

“share option scheme” means a scheme that provides an option to an employee to acquire shares in the company that employs that employee or otherwise;

“terminal benefit” means the amount payable from a fund or scheme, approved as an approved fund or as a benefit fund or pension fund at any time under the law relating to the taxation of income in the Republic prior to the enactment of this Act to an individual who is or was a member of that fund or scheme, on cessation of employment, withdrawal from or the winding up of the fund or scheme, but does not include an amount received—

(a) by way of annuity;

(b) in respect of services; or

(c) on account of sickness or disability;

"underground mining operations" has the meaning assigned to it in the Mines and Minerals Development Act, 2008.

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

“whole time service director” means a director of a company who is required to devote substantially the whole of his time to the service of such company in a managerial or technical capacity and is not the beneficial owner of, or able to control alone or with his nominees, five per centum or more of the issued share capital of or voting powers in such company;

(1A) Subject to sub-section (1B) where a provision of the Act refers, expressly or by implication, to a payment of a specified amount which is denominated in kwacha and the payment is made in another currency the amount of the payment, for purposes of that provision, shall be converted into kwacha at the appropriated rate published by the Bank of Zambia as at the end of the day on which the payment is due, irrespective of when the payment is actually made.

(1B) Where the payment referred to in sub-section (1A) is a payment of interest and the borrower has borrowed the principal in the course of a business carried on by the borrower, the conversion required by sub-section (1A) shall, subject to any direction by the Commissioner-General, be calculated as at the end of each day on which the interest accrues, irrespective of when payment of the interest is due.

(2) For the purposes of this Act, a beneficiary who was employed outside the Republic by the Government, or the Government of the former Federation, or a local authority or statutory corporation, during any period in which ordinary contributions were made, is, if he was resident outside the Republic only for the purpose of that employment, deemed to have been employed within the Republic during that period.

(3) The reference in the definition of “dividend” to “amount distributed or credited” shall be read and construed—

(a) so as to include—

(i) in relation to a company that is being wound up or liquidated, any profits distributed, whether in cash or otherwise, other than those of a capital nature, earned before or during the winding up or liquidation;

(ii) in relation to a company that is not being wound up or liquidated, any profits distributed, whether in cash or otherwise, other than those of a capital nature, including the value of that element of any shares awarded to its shareholders which is redeemable or capable of redemption by conversion and any debentures or securities awarded to its shareholders by a company;

(iii) in the event of the partial reduction of the capital of a company, any cash or the value of any asset which is given to the shareholder in excess of the cash equivalent of the nominal value by which the shares of that shareholder are reduced; and

(iv) in the event of the reconstruction of a company, any cash or the value of any asset which is given to the shareholder in excess of the nominal value of the shares held by him before reconstruction;

(b) so as not to include any cash or the value of any asset given to a shareholder, to the extent to which the cash or the value of the said asset represents a reduction of the share premium account of the company.

(4) Any reference in this Act to bankruptcy shall be construed in accordance with the provisions of the Bankruptcy Act, and “bankruptcy” shall be construed accordingly.

[S 2 am by Act 23 of 1968, 11 of 1969, 26 of 1970, 17 of 1971, 16 of 1972, 11 of 1973, 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1979, 10 of 1981, 12 of 1982, 11 of 1984, 11 of 1985, 8 of 1986, 14 of 1987, 15 of 1990, 12 of 1991, 11 of 1992, 4 of 1993, 12 of 1994, 2 of 1995, 7 of 1996, 3 of 1977.]

(1) An individual is, for the purposes of this Act, not treated as a resident in the Republic who is in the Republic for some temporary purpose only and not with any view or intent of establishing his residence therein, and who has not actually resided in the Republic at one time or several times for a period equal in the whole to one hundred and eighty-three days in any charge year, but if any such individual resides in the Republic for the aforesaid period he shall be treated as resident for that year.

(1) In this Act, income is received by a person when, in money or money's worth, or in the form of any advantage, whether or not that advantage is capable of being turned into money or money's worth, it is paid, given or granted to him, or it accrues to him or in his favour, or it is in any way due to him or held to his order or on his behalf, or it is in any way disposed of according to his order or in his favour, and the word “recipient” is construed accordingly.

(2) For the purposes of this Act—

(a) a dividend shall be deemed to accrue to share or stock holders, in the case of a dividend paid by a company which is being wound up or liquidated, on the day the dividend is received as provided in sub-section (1), and in the case of a dividend paid by a company which is not being wound up or liquidated, on the day of the resolution declaring the dividend:

Provided that where the resolution states that the dividend is to be paid to share or stock holders registered on a day in the future, the dividend shall be deemed to accrue to the share or stock holders on that day in the future; and

(b) a dividend accruing to a person which is deemed by virtue of any provision of this Act to be income of some other person shall be deemed to accrue to that other person on the day the dividend is by virtue of the provisions of paragraph (a) deemed to accrue.

[S 5 am by Act 23 of 1968, 11 of 1973, 10 of 1979.]

PART IIADMINISTRATION

6. Appointment of staff

(1) The Commissioner-General shall be responsible for carrying out the provisions of this Act.

(2) The Commissioner-General shall appoint staff of the Domestic Taxes Division of the Authority.

(1) The Commissioner-General may delegate to any officer in the Domestic Taxes Division any power or duty by this Act conferred or imposed upon him, other than those conferred on him by section 104 and this power of delegation, and, save as especially provided by this Act, any decision made or any notice or communication issued or signed by any such officer may be amended or withdrawn by the Commissioner-General, or by the officer concerned, and shall, for the purposes of this Act, until it has been so withdrawn, be treated as having been made, issued or signed by the Commissioner-General.

(2) Every officer appointed for the purposes of carrying out the provisions of this Act is under the Commissioner-General's direction and control, and shall perform such duties as may be required by the Commissioner-General.

(3) The Commissioner-General may confer any of the functions of the Commissioner-General under this Act upon any person if that person consents; and that person shall perform those functions under the direction of the Commissioner-General.

shall preserve and aid in preserving secrecy concerning the affairs of any person under this Act, save as the duty under this Act of that individual requires:

Provided that—

(i) the Commissioner-General may disclose any information, record or document to the Minister or to any public officer authorised by the Minister in writing and to the Director of Public Prosecutions when acting in exercise of his powers under the Anti-Corruption Commission Act;

(ii) any individual appointed for carrying out the provisions of this Act may disclose any information, record or document to the Auditor-General and any officer authorised by the Auditor-General;

(iii) no individual who is, or at any time has been, an officer appointed for the purpose of carrying out the provisions of this Act shall be required to produce in any court any document or to communicate to any court any information which has come into his possession or to his knowledge in the performance of his duties under this Act, except as may be necessary for the purpose of carrying out the provisions of this Act.

(2) Any individual who is in contravention of sub-section (1) who uses or reveals any information, record or document disclosed to him in accordance with the proviso to sub-section (1) save as his official duties require shall be guilty of an offence punishable with imprisonment for a term not exceeding two years or with a fine not exceeding two hundred penalty units, or to both.

[S 8 am by Act 17 of 1971, 14 of 1973, 14 of 1976, 8 of 1986, 13 of 1994, 14 of 1994.]

9. Regulations

The Minister may make regulations by statutory instrument in furtherance of and incidental to the provisions of this Act.

10. Record of assessment

The Commissioner-General shall cause a record to be kept of every assessment made under this Act.

11. Forms and notices

(1) All forms required for the administration of this Act shall be as prescribed by the Commissioner-General from time to time.

(2) Notices, forms, demands or other documents issued or given by the Commissioner-General under this Act may be signed by any officer authorised by the Commissioner-General in that behalf, and any such notice, form, demand or other document purporting to be signed by order of the Commissioner-General shall be as valid as if signed by the Commissioner-General.

(b) at the time it is left with some adult individual apparently living or occupying or employed at his last known abode, office or place of business; or

(c) unless the addressee proves to the contrary, ten days after it has been sent by post to his last known abode, or office, or to his postal address as notified by him to the Commissioner-General, or in care of his last known employer.

(3) Notice is given to any company at the time it is given to that company's taxpaying agent (as determined in section 66) in the manner provided by sub-section (2), or at the time it is sent, in the case of a company incorporated in the Republic, to the registered office of the company, and in the case of a company incorporated outside the Republic, either to the individual authorised to accept service of process under the Companies Act at the address filed with the Registrar of Companies, or to the registered office of the company wherever it may be situated, or, in either case, to any premises in the Republic where the company is carrying on business.

(4) Notice is given to any body corporate, other than a company, at the time it is given to the principal officer, secretary, accountant or manager in the Republic of such body corporate in a manner provided by sub-section (2), or at the time it is sent to the registered address, if any, of the said body corporate, or to any premises in the Republic where the said body corporate exercises any of its functions or powers.

(5) Notice to the Commissioner-General under this Act is given to him—

(a) at the time it is served upon him personally, electronically or upon any officer of the Domestic Taxes Division duly authorised by the Commissioner-General to receive such notice; or

(b) unless the Commissioner-General proves to the contrary, ten days after it has been sent by post addressed to the Commissioner-General or any officer of the Domestic Taxes Division duly authorised by the Commissioner-General to receive such notice.

(6) In this section, the term “post” means registered or unregistered post.

(7) Notice of any change in the place of abode or the postal address of any person receiving income assessable to tax shall be delivered in writing by that person to the Commissioner-General within thirty days of such change.

(a) by every person from a source within or deemed to be within the Republic; and

(b) by any individual ordinarily resident in the Republic, or by every person, not being an individual, who is resident in the Republic, by way of interest and dividends from a source outside the Republic.

(2) Subject to the other provisions of the Act, in the case of an individual, the amount of tax which, apart from this sub-section, would be charged in respect of any income received by that person in that charge year shall be reduced by the amount of the tax credit appropriate to such person for that charge year as specified in the Charging Schedule and that person shall be liable to pay tax for that charge year an amount equal to that reduced amount:

Provided that any assessment of that income shall—

(a) be for the whole amount of tax due before any tax credit; and

(b) show the amount due and payable after reduction by the amount of any credit due.

(6) The provisions of this Part, and of the First Schedule, relating to particular forms of income, are without prejudice to the generality of the charge of sub-section (1).

[S 14 am by Act 11 of 1969, 17 of 1971, 12 of 1982, 11 of 1992, 4 of 1993.]

15. Exemptions from tax

(1) There shall be exempt from tax the persons, funds, public benefit organisation and income declared to be exempt in the Second Schedule to the extent specified therein.

(2) The Minister may, by statutory order, approve, for the purposes of exemption from tax, any person, agency, organisation or foundation, which may be so approved by him by order in the Gazette pursuant to the Second Schedule, and may, by like order, exempt from tax the income or emoluments of any person, agency, organisation or foundation which may be so exempted by him by order in the Gazette pursuant to the said Schedule, and may, at any time, by like order, revoke any such order:

Provided that the Minister shall have the power to make or revoke such orders retrospectively.

[S 15 am by Act 11 of 1969, 11 of 1973.]

15A. Suspension and rebate of income tax

(1) The Minister may by regulation—

(a) suspend or provide for the suspension of the whole or part of any income tax due and payable under this Act;

(b) grant or provide for the grant of a refund of the whole or any part of income tax payable under this act;

in such circumstances, subject to such conditions and to such extent, as may be provided by or determined under the regulation.

(2) Regulations under this section suspending any payment of income tax or granting a rebate or refund may, if the Minister considers it expedient, be made with retrospective effect.

[S 15A am by Act 12 of 1991.]

16. Chargeability of income that cannot be remitted on accrual

Where the Commissioner-General is satisfied that any income cannot be remitted to the Republic in the charge year in which it accrues, then he may, if the person chargeable to tax in respect of that income so requests, determine that income shall not be chargeable to tax in the charge year in which it accrues but that it shall be chargeable to tax in the charge year in which it may first be remitted to the Republic:

Provided that the tax chargeable on such income shall not exceed the tax that would have been charged on the income if it had been charged to tax in the charge year or years in which it accrued.

[S 16 am by Act 26 of 1970.]

17. Classification of income

For the purposes of this Act, income includes, for any charge year—

(a) gains or profits from any business for whatever period of time carried on;

(b) emoluments;

(c) annuities;

(d) dividends;

(e) interest, charges and discounts;

(f) royalties, premiums or any like consideration for the use or occupation of any property;

(g) income from the letting of property; and

(h) the income as further classified in the First Schedule.

[S 17 am by Act 23 of 1968, 12 of 1982,14 of 1987.]

18. Income deemed within the Republic

(1) Income is deemed to be from a source within the Republic if that income—

(a) arises under any agreement made in the Republic for the sale of goods, irrespective of whether those goods have been or are to be delivered in the Republic;

(b) is remuneration from employment exercised or office held in the Republic or if it is received by virtue of any service rendered or work or labour done by a person or partnership in the carrying on in the Republic of any business, irrespective of whether payment is made outside the Republic, or by a person resident outside the Republic;

(c) is remuneration for services rendered outside the Republic to the Government or any statutory corporation if the person rendering the services is resident outside the Republic solely for that purpose;

(d) is a pension granted by a person wherever resident, irrespective of where the funds from which it is paid are situated, or where payment is made, except where the employment or office for which the pension is granted was wholly outside the Republic, and the emoluments were never charged to tax in the Republic;

(e) arises from interest incurred in the production of income or in the carrying on of a business in the Republic or paid directly or indirectly out of funds derived from within the Republic;

(f) arises from a royalty incurred in the production of income or in the carrying on of a business in the Republic or paid directly or indirectly out of funds derived from within the Republic;

(g) arises from the carriage, by a person who is not resident in the Republic, of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic other than passengers embarking in transit through the Republic or mails, livestock or goods shipped or loaded on transhipment through the Republic;

(h) arises from a management or consultant fee incurred in the production of income or in the carrying on of a business in the Republic and is received by a person or persons in partnership for a service other than such part thereof as is rendered by the person or persons in partnership in the carrying on of a business in the Republic; or

(j) income earned by a person resident in Zambia from the carriage of persons, mail, livestock or any other goods shipped or loaded outside Zambia to other destinations outside Zambia.

[S 18(1)(j) ins by s 3 of Act 7 of 2014 w.e.f. 1 January 2015.]

(2) Where a business is carried on partly within and partly outside the Republic by a person to whom this sub-section applies or where such a person receives a share of the profits of a business carried on in partnership partly within and partly outside the Republic, the whole of the person's share of the profits of the business or partnership is deemed to have been received from a source within the Republic.

(1) Where under the terms of any settlement and during the life of the settlor any income, or assets representing it, will or may become payable or applicable to or for the benefit of any child of the settlor and at the commencement of the charge year the child is unmarried and has not attained the age of twenty-one years, the income or assets representing it shall be deemed to be income of the settlor and, not income of any other person.

(a) any person has or may have power, whether immediately or in the future, and whether with or without the consent of any other person, to revoke or otherwise determine the settlement or any provision thereof; and

(b) in the event of the exercise of the power, the settlor or the wife or husband of the settlor will or may become beneficially entitled to the whole or any part of the property then comprised in the settlement, or of the income arising from the whole or any part of the property so comprised;

all income arising under the settlement from the property comprised in the settlement shall be deemed to be income of the settlor and, subject to the provisions of sub-section (1), not income of any other person:

Provided that this sub-section shall not apply by reason only that the settlor or the wife or husband of the settlor will or may become beneficially entitled to any income or property relating to the interest of any beneficiary under the settlement in the event that such beneficiary should pre-decease him.

(3) Where in any charge year the settlor or any relative of the settlor or any person under the direct or indirect control of the settlor or of any of his relatives, whether by borrowing or otherwise, makes use of any income arising or of any accumulated income which has arisen under a settlement to which he is not entitled thereunder, then the amount of such income or accumulated income so made use of shall be deemed to be income of the settlor for the charge year and not income of any other person.

(4) Where under the terms of any settlement to which this section applies any tax is charged on and paid by the person by whom the settlement is made, that person shall be entitled to recover from any trustee or other person to whom income is paid under the settlement the amount of the tax so paid, and for that purpose to require the Commissioner-General to furnish a certificate specifying the amount of tax so paid, and any certificate so furnished shall be conclusive evidence of the facts appearing therein.

(5) If any question arises as to the amount of any payment of income or as to any apportionment of income under this section, that question shall be decided by the Commissioner-General, whose direction thereon shall be final.

(6) This section applies to every settlement wheresoever it was made or entered into and whether it was made or entered into before or after the commencement of this Act and shall (where there is more than one settlor or more than one person who made the settlement) have effect in relation to each settlor as if he were the only settlor.

“settlement” includes any disposition, trust, covenant, agreement, whether reciprocal or collateral, arrangement or transfer of assets or income, but does not include—

(i) a settlement which in the opinion of the Commissioner-General is made for valuable and adequate consideration;

(ii) a settlement resulting from an order of a court;

(iii) any agreement made by an employer to pay to an employee or to the widow or any relative or dependent of such employee after his death such remuneration or pension or lump sum as the Commissioner-General may determine;

“settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into directly or indirectly, and any person who has provided or undertaken to provide funds or credit directly or indirectly for the purposes of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(1) Where, upon the termination of a written contract of employment after minimum period of two years completed service thereunder or such lesser period as the Commissioner-General may, in his discretion, deem reasonable, income is received under the terms of the contract by any individual by way of gratuity, then such income shall be charged in the charge year in which it is received at the appropriate rates applicable thereto pursuant to the Charging Schedule:

(i) any income received by way of gratuity in excess of twenty-five per centum of the basic salary earned during the period of employment to which such gratuity is related, shall, to the extent of such excess, be regarded and dealt with, for the purposes of this Act, as income received other than by way of gratuity;

(ii) any emoluments paid by way of gratuity by any company to any individual who is, or was at any time during the period of employment to which such gratuity is related, an effective shareholder of such company or who is, or was at any time a director of such company during the period of employment to which such gratuity is related, other than a whole time service director thereof, shall, for the purposes of this Act, be regarded and dealt with as income received by such individual other than by way of gratuity;

(iii) any emoluments paid by way of gratuity by an employer to an individual where the spouse of the individual, either alone or in partnership, is the employer of the individual shall, for the purposes of this Act, be regarded and dealt with as income received other than by way of gratuity;

(iv) any emoluments paid by way of gratuity by a company to an individual who or whose spouse is carrying on a business alone or in partnership and the services of the individual are provided to such a business by such company, shall for the purposes of this Act, be regarded and dealt with as income received other than by way of gratuity; and

(v) where the conditions of this sub-section are not complied with in respect of any emoluments paid to any individual by way of gratuity, such emoluments shall for the purposes of this Act, be regarded and dealt with as income received by such individual other than by way of gratuity.

(2) Where, upon the termination of a contract of employment, income is received by an individual by way of compensation for leave due but not taken, such income, if the individual irrevocably so elects, shall be regarded as accruing, and as being paid, proportionately on the last day of each month over the period during which the leave would have been taken, commencing with the first day after the date of termination of contract.

(3) Where, during the continuance of any employment, income by way of payment in advance for a leave period, is received by an individual proceeding on leave with the intention of resuming his employment at the termination of such leave period, such income shall be regarded as accruing and being paid proportionately on the last day of each month during the continuance of the period of leave.

(4) Where, as the result of any law, judicial order or judgement or the acceptance by an employer of any independent award or of representations by recognised association of employees, income is received by an individual by way of arrears of income in respect of present or past employment, such income shall be regarded as having accrued and as having been paid during the years to which such arrears relate, whether charge years under this Act or years of assessment under any previous law.

(5) Where, upon the termination of the services of any individual in an office or employment, income is received by way of—

(a) compensation for loss of office or employment; or

(b) repatriation allowance or severance pay, on termination by reason of redundancy, early retirement, normal retirement or death;

the first 35 kwacha of the total or aggregate income received, as applicable, shall be exempt from income tax.

[S 21 am by Act 11 of 1969, 16 of 1972,14 of 197 4, 14 of 1976, 14 of 1987, 29 of 1990,11 of 1992, 4 of 1993, 14 of 1994; s 21(5) subs by s 3 of Act 18 of 2013 w.e.f. 1 January 201482.]

22. Apportionment of income

Where in the case of any business it is necessary in order to arrive at the income of the business for any charge year or other period to divide and apportion to specific periods the income for any period for which accounts have been made up or to aggregate such income or any apportioned parts thereof, it shall be lawful to make such a division and apportionment or aggregation, and any apportionment under this section shall be made in proportion to the number of days in the respective period, unless the Commissioner-General, having regard to any special circumstances, otherwise determines.

23. Provisions relating to income from business

(1) Where in computing gains or profits for any charge year any expenditure or loss has been deducted or a deduction in respect of any reserve or provision to meet any liability has been made, and in a later charge year the whole or part of the expenditure or loss is recovered, or the whole or part of the liability is released, or the retention in whole or in part of the reserve or provision has become unnecessary, then any amount so recovered or released or no longer required as a reserve or provision shall be deemed to be gains or profits of the charge year in which it is recovered or released or no longer required.

(2) Any amount received under any insurance against loss of profits, or received by way of damages or compensation for loss of profits, shall be deemed to be gains or profits of the charge year in which it is received.

[S 23 am by Act 27 of 1970.]

24. Provisions relating to income after cessation of business

Where any amount is received by any person after the cessation of his business which, if it had been received prior to the cessation, would have been included in the gains or profits from the business, then, to the extent to which that amount has not already been included in the gains or profits, that amount shall be income of such person for the charge year in which it is received.

25. Insurance business

The gains or profits of an insurance business are ascertained in accordance with the provisions of the Third Schedule.

26. Income of partner

Where a business is carried on by two or more persons in partnership, the income of any partner from the partnership for any period is the share to which he was entitled in that period, such income being ascertained in accordance with the provisions of this Act and that share shall be assessed and charged on him accordingly.

27. Special provisions relating to deceased's estate and trusts

(1) This section applies to the income of a trust or of a deceased's estate.

(2) For the purposes of this Act, an amount received or forming part of the assets of a deceased's estate which became due and payable before the death of the deceased person and which the deceased person had a right to claim in his lifetime shall be treated as income received by the deceased person on the date the amount became due and payable if the amount would have been income of the deceased person had it been received by him in his lifetime.

(3) An amount received by a deceased's estate which did not become payable before the death of the deceased person shall be income of the deceased's estate for the purposes of this Act if the amount would have been income of the deceased person had it been received or been deemed to have been received by him in his lifetime:

Provided that any income received by way of emoluments earned by the deceased person during his lifetime shall be deemed to be income received by the deceased person on the date of his death.

(4) Where a beneficiary is entitled to the whole or part of the income of a trust or deceased's estate, the Commissioner-General may, instead of assessing and charging the whole or part of the income on the trustees or executor or administrator, determine that the income of the trust or deceased's estate attributable to the beneficiary's interest for any charge year or any amount paid out of the income of the trust or deceased's estate on behalf of the beneficiary in any charge year shall, for the purposes of this Act, be assessed and charged on the beneficiary as if it were his income.

[S 27 am by Act 23 of 1968, 14 of 1976.]

28. Income of non-resident air, sea or land transport business

(1) The income that is deemed under paragraph (g) of sub-section (1) of section 18 to be from a source within the Republic for any period shall be an amount bearing the same proportion to the amounts received in respect of the carriage of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic as the total gains or profits of such business for the period bear to the total amount received for the period for the carriage of passengers, mails, livestock or goods.

(2) The Commissioner-General may accept as evidence of the total gains or profits and total amount mentioned in sub-section (1), a certificate of such gains or profits and amount issued by or on behalf of any income tax authority which the Commissioner-General is satisfied computes the gains or profits of the business on a basis not materially different from that provided in this Act.

(3) Where at the time of assessment, the provisions of sub-section (1) cannot for any reason be satisfactorily applied, the income from the Republic may be computed at such percentage of the full amount received which is attributable to the carriage of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic as the Commissioner-General may determine.

(4) Any person assessed under the terms of sub-section (3) in respect of any charge year may claim at any time within six years after the end of the charge year that his liability to tax be recomputed on the basis provided by sub-section (1)

[S 28 am by Act 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1981, 11 of 1984.]

PART IVDEDUCTIONS

29. Deductions generally

(1) Subject to the provisions of this Part—

(a) in ascertaining business gains or profits in any charge year, there shall be deducted the losses and expenditure, other than of a capital nature, incurred in that year wholly and exclusively for the purposes of the business; and

(b) in ascertaining income from a source other than business, only such expenditure, other than expenditure of a capital nature, is allowed as a deduction for any charge year as was incurred wholly and exclusively in the production of the income from that source:

Provided that on the amount payable by way of insertion upon money borrowed by any person where the Commissioner General is satisfied that the loan or advance was obtained for capital employed wholly and exclusively for business purposes or in the production of income, a deduction shall be allowed.

(1) Notwithstanding the provisions of section 29 or any other provisions of this Act, any foreign currency exchange gains or losses, other than those of a capital nature, shall be assessable or deductible, as the case may be, in the charge year in which such gains or losses are realised, that is to say, in the charge year in which the person or partnership concerned is required to pay the additional kwacha or is allowed a rebate or a reduction in settlement of a foreign debt or liability:

(3) Where the accounts of a bank made up for the bank's accounting period ending in the charge year ending 31st March, 1999 recognise any foreign currency exchange gain or loss but that gain or loss is not realised within the meaning of sub-section (1) in that charge year, then the amount of that gain or loss shall be deemed to be a gain or loss of the business carried on by the bank assessable or deductible, as the case may be, in the charge year ending 31st March, 2000.

(1) Subject to the other provisions of this section, any loss incurred in a charge year on a source by a person, shall be deducted only from the income of the person from the same source as that in which the loss was incurred.

(2) Subject to the other provisions of this section, where a loss referred to in sub-section (1) exceeds the income of a person for the charge year in which the loss was incurred, the excess shall, as far as possible, be deducted from the income of the person from the same source as that in which the loss was incurred for the following charge year;

(i) in the case of any loss incurred by any person carrying on mining operations, the loss shall not be carried forward beyond ten subsequent charge years after the charge year in which the loss is incurred;

(ii) in the case of a loss incurred by a person carrying on hydro and thermo power generation, the loss shall not be carried forward beyond ten subsequent charge years after the charge year in which the loss was incurred;

(3) Where on the death of an individual his interest in a business passes to his spouse, any un-deducted loss attributable to such interest shall be deducted from the spouse's income from that business in accordance with the provisions of sub-section (2) .

If a company has incurred a loss on a source for the purposes of this Act and that company in this section called the old company) —

(a) was incorporated outside the Republic; and

(b) carried on its principal business within the Republic; and

(c) is about to be wound up voluntarily in its country of incorporation for the purposes of transferring the whole of its business and property wherever situate, to a company which has been or will be incorporated in the Republic (in this section called the new company) for the purposes of acquiring that trade and property and the only consideration for the transfer will be the issue to the members of the old company of shares in the new company in proportion to their shareholdings in the old company;

the new company after the transfer referred to in paragraph (c) shall be allowed the old company’s loss as deduction from income from the same source as that in which the old company’s loss was incurred to the extent that the loss has not been allowed as a deduction under this Act for any charge year and such loss shall be allowed in accordance with the provisions of section 30:

Provided that the combined period of loss carried forward for both the old and new companies shall not exceed five years.

(1) Subject to the provisions of sub-section (2), no person may carry forward any loss incurred before he had been adjudged bankrupt.

(2) Where any person has made a conveyance or assignment of his property for the benefit of his creditors, or has made an arrangement with them, or has entered into a composition with them which has been approved by the High Court pursuant to any Bankruptcy Act in force in the Republic, whereby the said person is released from his debts or from any proportion or part thereof, any loss incurred by him prior to his making of such conveyance, or assignment, or arrangement, or his entering into such composition, may be carried forward, reduced, however, pro tanto, by the amount of the debts released by or under the said conveyance, assignment, arrangement, or composition, as the case may be, and such loss shall be allowed in accordance with the provisions of section 30.

[S 32 am by Act 11 of 1969, 14 of 1976.]

33. Capital allowances

(1) Capital allowances are deducted in ascertaining the gains or profits of a business and the emoluments of any employment or office for each charge year—

(a) for buildings, implements, machinery and plant, and premiums, according to the provisions of Parts I to V inclusive of the Fifth Schedule;

(b) for capital expenditure in relation to mining operations, according to the provisions of Parts Ito VI inclusive of the Fifth Schedule; and

(2) The capital allowances to be claimed by a person carrying out any mining operations and keeping books of accounts in United States dollars under subsection (3) of section 55 shall be indexed capital allowances.

Where a person incurs capital expenditure on the construction of, addition to, or alteration of any industrial building, as defined in paragraph 1 of the Fifth Schedule, to be used by him for the purposes of his business as a manufacturer, an investment allowance of ten per centum of such expenditure shall be deducted in ascertaining the gains or profits of that business for the year in which the said building, addition or alteration is first used for the said purposes.

[S 34 am by Act 11 of 1969, 26 of 1970, 11 of 1985, 14 of 1987, 4 of 1993.]

34A. Development allowance

(1) Where a person incurs expenditure on the growing of rose flowers, tea, coffee, or banana plant or citrus fruit trees, or other similar plants or trees, an allowance (in this Act referred to as a development allowance) of ten per centum of such expenditure shall be deducted in ascertaining the gains or profits of that business for the charge year.

(2) The development allowance referred to in sub-section (1) may, in the case of a person growing for the first time plants or trees referred to therein, be carried forward to the following charge years up to the first year of production, but in no case shall the development allowance in respect of more than three consecutive years be carried forward.

A deduction is allowed in ascertaining the gains or profits of a business for the charge year in which that business commences, in respect of any expenditure that—

(a) was incurred within eighteen months before the commencement of the business; and

(b) would have been allowed as a deduction in ascertaining the gains or profits of the business after its commencement.

36. Amount paid after cessation of business

Where any amount is paid by any person after the cessation of his business which, if it had been paid prior to the cessation, would have been deductible in computing his gains or profits from the business, then, to the extent to which that amount has not already been deducted in computing the gains or profits, it shall be deducted from his income for the charge year in which it is paid or, if he has not income in that charge year, from his income for the charge year in which the business ceased, and such deduction shall be made before deductions under sections 30, 31 and 32.

(1) A deduction shall, subject to the provisions of this sub-section and sub-section (12), be allowed in ascertaining deductions the income from emoluments of an employee for a charge year of any amount paid by the employee during that charge year by way of contribution to any approved fund including the National Pension Scheme Authority, if the fund to which the contribution is made continues to be an approved fund for that charge year:

Provided that no deduction shall be allowed under this sub-section in respect of any contribution other than a contribution —

(a) which is not a contribution in arrear, in this sub-section referred to as a current contribution; or

(b) which is a special lump sum contribution allowed to be deducted under and in accordance with sub-section (2).

(2) A contribution paid by an employee—

(a) in respect of services rendered by the employee, while resident in the Republic, to that employee’s employer prior to the date of the employee becoming a member of the approved fund to which the contribution is paid; or

(b) in respect of a period when the employee was resident and employed in the Republic prior to the date of the employee becoming a member of a fund within paragraph (c) of the definition of approved fund or a fund approved under paragraph 5 of the Fourth Schedule to which the contribution is paid;

in order that the employee may qualify for benefits under the approved fund to which the contribution is paid in respect of such prior services or period shall be a special lump sum contribution and shall, for the purposes of sub-section (1), be treated as a current contribution for the charge year or current contributions for the charge years, in such amounts as the Commissioner-General may direct.

(3) The deduction to be allowed to an employee for a charge year in respect of the employee’s current contributions to approved pension funds shall not exceed—

(a) fifteen per centum of the employee’s income from emoluments liable to tax which have been received for that charge year from any employer who established, adhered to or continued the said approved pension fund, the fifteen per centum to be calculated before any deduction under this sub-section; or

(4) The total deductions to be allowed to an employee for a charge year in respect of current contributions to an approved fund within the meaning of paragraph (c) of the definition of approved fund and a fund approved under paragraph 5 of the Fourth Schedule, shall not exceed fifteen per centum of the income from emoluments of the employee liable to tax before allowing any deduction under this sub-section for that charge year or three thousand and sixty kwacha, whichever is the less.

(5) The total of the deduction to be allowed for a charge year under sub-sections (3) and (4) shall not exceed fifteen per centum of the income from emoluments of the employee liable to tax before allowing any deduction under this sub-section for that charge year or three thousand and sixty kwacha, whichever is the less, and in any case shall not exceed the assessable income of the employee for the charge year before allowing the deductions under this sub-section, sub-section (9) and sections 30, 32, 36 and 41.

(6) A deduction shall, subject to the provisions of this sub-section, be allowed in ascertaining the gains or profits of an employer for a charge year of any amount paid during that charge year by the employer by way of contribution to an approved fund established for the benefit of the employees, including an approved fund within the meaning of paragraph (c) of the definition of approved fund and a fund approved under paragraph 5 of the Fourth Schedule, if the fund to which the contribution is made continues to be an approved fund for that charge year:

Provided that no deduction shall be allowed under this sub-section in respect of any contribution other than a contribution—

(a) which is not a contribution in arrear, in this sub-section referred to as a current contribution: or

(b) which is a special lump sum contribution which is allowed to be deducted under and in accordance with sub-section (7).

(7) A contribution paid by an employer—

(a) in respect of services rendered to the employer by an employee prior to the date of the employee becoming a member of the approved fund to which the contribution is paid in order that the employee may qualify for benefits under that approved fund in respect of such prior services; or

(b) for any other reason approved by the Commissioner-General; shall be a special lump sum contribution and shall be treated as a current contribution for such charge year or as current contributions for such charge years and in such amounts as the Commissioner-General may direct.

(8) The deduction to be allowed for a charge year in respect of current contributions to an approved fund other than a fund approved under sub-section (1) of section 11 of the former Act shall not exceed twenty per centum of the emoluments liable to tax received from the employer in that charge year by each employee in respect of whom the contributions are paid.

(9) A deduction shall, subject to the provisions of this sub-section and sub-section (12), be allowed from the income of an individual for a charge year of any amount paid by the individual during that charge year by way of a premium payable under an approved annuity contract if the pension fund to which the contribution is paid or the annuity contract under which the premium is paid continues to be an approved fund for that charge year and such deduction shall be deducted from the income of an individual before deductions under sections 30, 32, 36 and 41.

(10) The deduction to be allowed for a charge year under this sub-section shall not exceed three thousand and sixty kwacha or the assessable income of the individual for the charge year before allowing the deduction under this sub-section and a deduction under sections 30, 32, 36 and 41, whichever is the less, except that in the case of an individual who is not resident in the Republic, the deduction shall not exceed an amount equal to the contribution or premium paid, multiplied by the fraction of that individual’s assessable income over the individual’s world income.

(11) For the purposes of sub-section (10) “world income” in relation to any person, means the total amount of that person’s income from all sources, excluding the income which is chargeable to tax but which the Commissioner-General is precluded from including in an assessment, the amount of income from each source being substantiated to the satisfaction of the Commissioner-General.

(12) The total of all deductions to be allowed to an individual under sub-sections (1), (2), (3), (4), (5), (9) and (10) for a charge year shall not exceed three thousand and sixty kwacha or the assessable income of that individual for that charge year before allowing the deductions under sections 30, 32, 36 and 41, whichever is the less.

A deduction shall be allowed in ascertaining the gains or profits of an employer for a charge year of any amount incurred by the employer in the establishment or in the administration of an approved share option scheme for that charge year.

A deduction shall be allowed in ascertaining the gains or profits of a business for any payment made for the purposes of technical education relating to that business or for the purposes of obtaining further experience, training or qualifications, relating to that business:

Provided that no deduction shall be allowed under this section in respect of any payment made—

(a) on behalf of an individual who is related by blood or marriage to the person making the payment, or to a person who is able to control directly or indirectly the person making the payment;

(b) in pursuance of an agreement or undertaking to the effect that the person making the payment will receive any reciprocal benefit for such payment where made on behalf of an individual who is related by blood or marriage to any other party to that agreement or undertaking.

[S 38 am by Act 26 of 1970.]

39. Subscriptions

A deduction is allowed in ascertaining the gains or profits of a business or the emoluments of any employment or office for any subscription paid by a person in respect of his membership of a trade, technical or professional association which is related to his business, employment or office.

(1) Subject to the other provisions of this section, an amount paid by a person during a charge year to a public benefit organisation shall be deducted from the income of that person for that charge year if—

(a) the payment is in money or money's worth;

(b) the payment is made for no consideration;

(c) subject to sub-sections (2) and (3), the Minister approves the public benefit organisation to which the payment is made:

Provided that an approval by the Minister may be given retrospectively; or

(d) the payment is made to a public benefit organisation that is owned by the Government.

(2) Where a public benefit organisation is owned by the Government, the organisation shall not require the Minister's approval.

(3) The Minister may withdraw an approval given under paragraph (c) of sub-section (1), if the public benefit organisation—

(a) is not exclusively providing a public benefit activity;

(b) submits false information in the organisation's application to the Minister for approval as a public benefit organisation; or

(c) uses resources for a purpose other than that provided for in the organisation's objectives.

(4) A deduction in the charge year under this section shall be allowed before a deduction under sections 30, 31, 32 and 36 and shall not exceed fifteen per centum of the assessable income of a person for that charge year.

(1) A deduction is allowed in ascertaining the gains or profits of a business of any expenditure, not being expenditure of a capital nature, incurred by the business during a charge year on experiments or research relating to the business.

(2) A deduction is allowed in ascertaining the gains or profits of a business for any contribution to a scientific or educational society or institution or other like body of a public character approved by the Commissioner-General where a condition of the contribution is that it must be utilised by the society, institution or body, as the case may be, solely for the purposes of industrial research or scientific experimental work connected with the business.

43A. Deduction for bad and doubtful debts

(1) A deduction shall be allowed in ascertaining the income from any source for debts to the extent that the debts have been included in the income from that source and to the extent that they are proved to the satisfaction of the Commissioner-General to be bad or likely to become bad and, where there is no income from that source for the charge year for which such deduction is due that deduction shall be deemed to be a loss under section 30.

(2) Where a deduction has been allowed under sub-section (1) in respect of any debt, and in the subsequent charge year part or all the debt is recovered, the amount of the recovery or, where less, the total deductions allowed in one or more charge years in respect of that debt, shall be assessable in the charge year in which the recovery is received:

Provided that where recoveries are effected in more than one charge year, the total amount assessable in each charge year after the first such charge year shall not exceed the amount of the recovery in that later year or, where less, the total of the deductions previously allowed less any recoveries assessable in previous charge years.

(3) Where a claim for a deduction is made under sub-section (1) by a bank, bank subsidiary or financial institution, sub-section (1) shall apply subject to the following:

(a) the words “to the extent that the debts have been included in the income from that source” in that sub-section shall not apply; and

(b) the maximum deduction for any debt falling within the classifications set out under the Banking and Financial Services Act shall not exceed the prescribed level of provisioning for the debt required by theBank of Zambia under the Banking and Financial ServicesAct, less the value of security or collateral pledged against the debt.

(1) A deduction shall be allowed in ascertaining gains or profits of a business of any mineral royalty payable and paid for a charge year in pursuance of the provisions of section 66 of the Mines and Minerals Development Act.

(2) This section shall not apply to any royalty payable and paid for any charge year prior to the charge year ending 31st March 2000.

(1) A deduction shall be allowed in ascertaining the gains or profits of a business in respect of each person with disability who has been employed full-time by such business for the whole or substantial part of the charge year for which the deduction is claimed.

(2) The amount of the deduction referred to in sub-section (1) shall be one thousand kwacha.

(g) any amount which would be deductible in ascertaining the income from a source or from income which the Commissioner-General is prohibited from including in any assessment under the provisos to sub-section (1) of section 63;

(h) any expenditure incurred or capital asset employed, whether directly or indirectly, in the provision of entertainment, hospitality or gifts of any kind:

Provided that this paragraph shall not apply to—

(i) any expenditure incurred or capital asset employed in the provision of anything which it is the purpose of a person's business to provide and which is provided in the ordinary course of that business for payment or for the purpose of advertising to the public generally without payment;

(ii) …

[S 44(h) proviso para (ii) rep by Act 11 of 1992.]

(iii) any expenditure incurred in the provision of a gift to any person consisting of an article incorporating a conspicuous advertisement for the donor the cost of which to the donor, taken together with the cost to him of any other such articles given by him to that person in the same charge year, does not exceed one hundred kwacha;

(l) the cost of any benefit or advantage not capable of being turned into money or money's worth that is provided to employees, subject to such directions as shall be issued by the Commissioner-General;

[S 44 am by Act 26 of 1970, 27 of 1970, 17 of 1971, 11 of 1973, 11 of 1975, 14 of 1976, 10 of 1981, 14 of 1987, 11 of 1992, 4 of 1993, 2 of 1995; s 44(o) ins by s 5(c) of Act 3 of 2003 w.e.f. 1 April 2003141.]

PART VRETURNS AND ASSESSMENTS

45. Notice to Commissioner-General

Every person within thirty days from first receiving income liable to tax under this Act shall give written notice accordingly to the Commissioner-General.

[S 45 am by Act 26 of 1970.]

45A. Duty to provide taxpayer identification number

(1) Every person shall provide his taxpayer identification number with all forms, notices, certificates, documents, and other communications submitted to the Commissioner-General under this Act.

(2) Any person carrying on any business in partnership shall provide the taxpayer identification number of every partner with all documents, forms, notices, certificates, and other communications submitted to the Commissioner-General under this Act.

(3) Every person making payments for which it is required to submit to the Commissioner-General a return, notice, form, certificate, or other such document under sections 50, 52, 71, 80, 81, 81A, 82, or 95D of this Act shall furnish to the Commissioner-General on or along with that document the taxpayer identification numbers for all persons to whom the payments have been made.

(4) This section shall have effect irrespective of the charge year to which the forms, notices, certificates, documents and other communications referred to in sub-section (1) to (3) pertain.

(5) For the purposes of sub-section (1), “person” includes a partnership.

(1)The institutions listed in column 1 of this sub-section shall require a taxpayer identification number from any person, applying for anything listed, or engaged in the types of transactions listed, whichever is applicable, in column 2 of this section.

(2) Each institution listed in column 1 of sub-section (1) shall avail the Commissioner-General or his authorised agent access to the documents, forms, notices, certificates, and other communications in which a tax-payer identification number is required to be used under sub-section (1):

Provided that such access shall be as is necessary to assist in the enforcement of the tax laws.

(3) Any person, including a person carrying on any business in partnership, who is required under sub-section (1) to furnish a tax-payer identification number and who furnishes a false number shall be guilty of an offence under this Act.

[S 45B am by Act 4 of 1993.]

46. Returns generally

(1) Every person liable to tax for any charge year, other than an individual whose income consists entirely of emoluments within the provisions of Part VI (which relates to Pay As You Earn), shall furnish to the Commissioner-General a return of income and such particulars as may be required for the purposes of ascertaining the income chargeable, if any, and the tax liability due, if any under this Act.

(2) The return required under this section shall—

(a) contain a statement of the person's income liable to tax, including income deemed under this Act to be the income of the person in respect of whom the return is submitted but excluding any income which cannot be assessed by virtue of the proviso to sub-section (1) of section 63;

(b) contain a computation, by or on behalf of the person liable to tax, of the amount of tax due based on rates of tax applicable for such charge year and, in the case of an individual, any deductions, and tax credit to which he is entitled;

(c) include a declaration by such person, or by the person in whose name he is assessable, that such return includes a full statement of income liable to tax and a proper computation of tax due for such charge year; and

(1) Without prejudice to the requirement under section 46, every person, including an individual whose income consists entirely of emoluments within the provisions of Part VI which relates to (Pay As You Earn), shall submit in accordance with this section a return of provisional income and tax for any charge year:

Provided that an individual who does not expect to receive assessable income (other than emoluments within the provisions of Part VI in excess of the amount specified in subparagraph (c) of paragraph 2 of the Charging Schedule for such charge year need not submit such return.

[S 46A(1) proviso am by s 18 of Act 7 of 1996, s 11(b) of Act 9 of 1998 w.e.f. 1 April 1998160, s 11(a) of Act 6 of 1999 w.e.f. 1 April 1999161, s 11 of Act 4 of 2000 w.e.f. 1 April 2000162, s 6(a) of Act 1 of 2001 w.e.f. 1 April 2001163, s 11(a) of Act 3 of 2002 w.e.f. 1 April 2002164, s 4 of Act 18 of 2013 w.e.f. 1 January, 2014This Ac shall come into operation on 1st January, 2014, and shall have effect in relation to the charge of tax for the charge year which ends on 31st December, and in relation to each subsequent charge year.')164a]

{mprestriction ids="1,2,3,5"}

(2) The return of provisional income required under this section shall—

(a) contain an estimate (based on information reasonably believed to be true) of the person's income liable to tax, including income deemed under this Act to be the income of the person in respect of whom the return is submitted but excluding any income which cannot be assessed by virtue of the proviso to sub-section (1) of section 63;

(b) contain a computation of tax based on rates of tax applicable for such charge year and, in the case of an individual, deducting any tax credit to which the individual is entitled, and any such computation shall exclude tax on income falling within Part VI (Pay As You Earn) and any tax deducted from any other income;

(3) The return of provisional income referred to in sub-section (2) shall be furnished—

(a) in any charge year, not later than the 31st March of the charge year to which the return relates; and

(b) in the charge year ending 31st December, 2012, not later than 30th June, 2012:

Provided that where during the course of the charge year, any person discovers that the return of provisional income furnished under this section is likely to be substantially incorrect because of changed circumstances, such person shall furnish a revised return of provisional income and in such a case, any alteration in the amount of estimated tax payable shall be taken into account in the next installment, pursuant to section 77, immediately following the date of such revised return.

(4) Where an individual is not required to make a return of provisional income and tax—

(a) for any charge year; and

(b) for the charge year ending 31st December, 2012;

by virtue of the proviso to sub-section (1), but at a time subsequent to 31st March in that year, and in the case of paragraph (b) at a time subsequent to 30th June, 2012, that proviso ceases to apply to the individual, that individual shall make a return in accordance with sub-sections (1) and (2) within fourteen days of the proviso ceasing to apply to that individual.

(5) Where, upon the receipt of a return of income pursuant to section 46, it is discovered that income has been so underestimated that the tax on such estimate has been underpaid by at least one-third, then such person shall be liable to a penalty under this section calculated at the rate of twenty-five percent of the tax which has been underpaid;

(6) In this Act any reference to a person's provisional income for any charge year is a reference to the estimate calculated in accordance with paragraph (a) of sub-section (2) of that person's income for that charge year.

(7) In this Act any reference to any provisional tax which a person is liable to pay during any charge year is a reference to the estimate calculated in accordance with paragraph (b) of sub-section (2) of that person's tax liability for that charge year.

(1) Where any person has, for any year, failed to submit a return or revised return under section 46A the Commissioner-General may—

(a) estimate such person's income chargeable to tax, in accordance with paragraph (a) of sub-section (2) of section 46A; and

(b) compute the provisional liability to tax of that person on that estimated income in accordance with paragraph (b) of sub-section (2) of section 46A; and shall serve notice on that person specifying the amount of income so estimated and the provisional tax liability so computed.

(2) Subject to sub-sections (1) and (3) of section 46A a notice served on any person under sub-section (1) shall, for the purposes of this Act, be deemed to be a return of provisional income and tax made by that person, and a person is not relieved of any obligation to make any return of provisional income or tax or from any penalties for failure to make such a return under section 46A.

(3) Where a person who has been served with a notice under this section makes a return under section 46A which, apart from the date on which the return is made, complies with the requirements of that section, the notice under this section shall cease to have effect.

(1) The Commissioner-General may, by notice in writing require any person to furnish him, within a reasonable time specified in the notice, with further returns or particulars in relation to any matter contained in a return made under this Act or in relation to any transactions or matters appearing to the Commissioner-General to be relevant to the ascertainment of the income of that person.

(2) The Commissioner-General may determine that any person shall make a return on another person's behalf, and any such return is the return of that other person for the purposes of this Act, save that the operation of this sub-section shall not relieve that other person of any liability under this Act.

(3) Any person preparing, signing or rendering any return or statement for the purposes of this Act is deemed to be aware of the contents of that return or statement.

Every person shall furnish to the Commissioner-General such information, whether relating to the affairs of himself or any other person, as the Commissioner-General determines is necessary for the purposes of this Act, and every provision of this Act relating to the delivery of information to the Commissioner-General is without prejudice to the generality of this section.

48A. Disapplication of secrecy obligations

(1) Subject to subsection (2), the provisions of this Act shall have effect notwithstanding any obligation as to secrecy or other restriction on the disclosure of informtion imposed under the Banking and Financial Services Act, the Evidence (Bankers' Books) Act, the Accountant Act, 2008 and the Legal Practitioners Act in respect of information required by the Commissioner-General for the purposes of this Act.

(2) Subsection (1) shall not apply to information received from, or obtained on, a client by a legal practitioner—

(a) in the course of ascertaining or receiving instructions from a client; or

(b) in defending or representing a client, or concerning judicial, administrative, arbitration or mediation proceedings, including advice on instituting or avoiding proceedings, whether such information is received or obtained before, during or after such proceedings.

The Commissioner-General may give notice in writing to any person requiring him to furnish within the time limited by such notice, not being less than thirty days from the date of service of such notice, a statement in writing containing particulars of—

(a) all banking accounts, whether current or deposit business or private, in his own name or in the name or names of his wife or wives, or in any other name, in which he is or has been interested, or on which he has or has had power to operate, jointly or solely, and which are in existence or which have existed at any time during the period stated in the notice;

(b) all savings and loan accounts, deposits, building society, and cooperative society accounts, in regard to which he has, or has held, any interest or power to operate jointly or solely during the period aforesaid;

(c) all assets, other than those referred to in paragraph (a) or (b) which he and his wife or wives possess, or have possessed, during the period aforesaid;

(d) all sources of income not referred to in paragraph (a), (b) or (c) and the income derived therefrom; and

(e) all facts bearing upon his liability to income tax to which he is or has been liable.

50. Return of lodgers and inmates

The Commissioner-General may by notice in writing require any person whose business is to provide living accommodation to deliver a list of all persons he has so accommodated.

51. Information as to business matters

Whenever so required by the Commissioner-General, and in the prescribed form, everyone carrying on business shall deliver returns showing—

(a) particulars of all payments in respect of any share or interest in the business;

(b) particulars of all moneys received by him on deposit;

(c) particulars of any interest received or paid by him; and

(d) such other information as may be in his possession relating to the income received by any other person.

Notwithstanding anything to the contrary in any written law, any officer in the service of the Government, a local authority or public body who has charge of documents or electronically stored data which might aid the carrying out of the provisions of this Act shall permit the Commissioner-General or the Commissioner-General's authorised officer to inspect and copy those documents or electronically stored data, and have custody of such of them as are necessary for production in proceedings.

Every resident company shall deliver to the Commissioner-General a copy of its memorandum and articles of association, and copies of all amendments thereto, and, if the Commissioner-General so determines, all such particulars relating to the company's affairs and shareholders as the Commissioner-General may in writing require.

55. Accounts and records

(1) Every person carrying on a business shall keep, in the English language, books and accounts of all his transactions, and, unless otherwise authorised by the Commissioner-General, shall retain for six years from the date of the last entry all documents relating to any business carried on by him, or otherwise recording the details from which his returns for the purposes of this Act were prepared.

(2) A person who retains, in accordance with conditions specified by the Commissioner-General, photographic reproductions of the documents referred to in sub-section (1) is deemed to retain those documents for the purposes of that sub-section.

(3) A person carrying out any mining operations may elect to keep books of accounts in United States Dollars of all transactions relating to, connected with, or incidental to, such operations if the Commissioner-General is satisfied that not less than seventy-five per centum of that person's gross income from mining operations is earned in the form of foreign exchange from outside the Republic.

Provided that such election shall not be reversed without the consent of the Commissioner-General.

[S 55 am by Act 14 of 1994.]

56. Documents in support of returns

(1) Notwithstanding subsection (3) of section 55, a return furnished under sub-section (1) of section 46 by a person may be supported by such accounts in Kwacha and other documents as are necessary to support the return and shall be signed by the person furnishing the return.

(2) Where such accounts were audited by a person in a professional capacity or where such accounts were not so audited but were prepared by a person in a professional capacity, that auditor or person shall furnish a certificate signed by him stating—

(a) the nature of the books of account and other documents from which such accounts were prepared;

(b) the extent of his verification of the books of account and other documents produced to him;

(c) whether and to what extent, if any, there are included any estimated amounts or balancing adjustments;

(d) whether and subject to what reservations, if any, he considers that such accounts present a true and fair view of the gains or profits from such business for the period and the state of business at the end of the period; and

(3) Where a person furnishes a return supported by accounts and such accounts were not audited or prepared by a person referred to in sub-section (2), then he shall furnish a certificate signed by himself stating—

(a) the nature of the books from which such accounts were prepared;

(b) whether and to what extent, if any, there are included any estimated amounts or balancing adjustments;

(c) whether such accounts include all the transactions of his business and present a true and fair view of the gains or profits from such business for such period.

(4) In this section, “accounts” means a balance sheet or statement of assets and liabilities together with a trading account, profit and loss account or an income and expenditure account or other similar statement, however named.

(5) For the purposes of this section, “person in a professional capacity” shall mean an individual carrying on the profession of accountant or auditor or one who prepares accounts for reward or in the course of his business, either on his own or in partnership or as an employee.

Where the Commissioner-General determines that any person is able to impart information necessary for the purposes of this Act, the Commissioner-General may, on reasonable notice to that person, require him to attend to be examined at the time and place specified in the notice.

58. Production and preservation of books and documents

For the purpose of obtaining full information in respect of the income of any person or class of persons, the Commissioner-General may, by notice in writing, require, in the case of the income of any person, that person or any other person, and in the case of any class of persons, any person—

(a) to produce for examination by the Commissioner-General, at such time and place as may be specified in such notice, any accounts, books of account and other documents or electronically stored data which the Commissioner-General may consider necessary;

(b) to produce forthwith for retention by the Commissioner-General for such period as may be reasonable for their examination any accounts, books of account and other documents or electronically stored data which the Commissioner-General may specify in such notice;

(c) not to destroy, damage or deface, on or after service of such notice, any of the accounts, books of account and other documents or electronically stored data so specified without permission of the Commissioner-General in writing.

Provided that the amount of income received by way of dividends from which tax has been deducted in accordance with the direction of the Commissioner-General made pursuant to the provisions of paragraph (a) of sub-section (1) of section 81 shall be the amount that would have been received if tax had been deducted at the rate that would have been deductible but for the direction.

(2) The amount of income received from a source outside the Republic (in this section called foreign income) shall be the gross amount of that income before the deduction of the amount of the foreign tax.

(3) The amount of the income received by a beneficiary from a trust or deceased's estate on which tax has been paid or is payable by the trust or deceased's estate shall be the gross amount of that income before deduction of tax at the rate paid or payable on that income by the trust or deceased's estate.

(4) In this section, “foreign tax” has the same meaning as in section 75 or 76, as the case may require.

[S 60 am by Act 16 of 1972, 11 of 1973, 11 of 1974, 9 of 1977, 9 of 1978.]

61. Partnership returns

Persons carrying on any business in partnership shall furnish a joint return of the income of the partnership for a charge year declaring therein the names and addresses of all the partners and the amount of the share of the income to which each partner is entitled for that year, together with such other particulars as the Commissioner-General may, in writing, require.

62. Business accounts

(1) Where the accounts of the business of any person or partnership are made up for a period of twelve months ending on some date other than the last day of the charge year, the Commissioner-General may in his discretion accept such accounts for the purposes of determining the gains or profits of the business in respect of the charge year ending either before or after the closing date of such accounts, and the Commissioner-General may for the purposes of this sub-section accept accounts for a period less than twelve months as though the accounts had been made up for a period of twelve months.

(2) Where the Commissioner-General accepts the accounts of the business of a person or a partnership pursuant to sub-section (1), the accounts of that business shall for the purposes of this Act be made up subject to sub-section (3) for all subsequent charge years to the date corresponding in subsequent charge years to the date so accepted.

(3) Where the accounts of the business of a person or partnership are not made up in respect of a subsequent charge year to the date in that year corresponding to the date so accepted, then the income of the business for that subsequent charge year and the preceding year may be computed or adjusted, as the Commissioner-General, in his discretion, may decide.

(3A) Where a company makes up the accounts of its business for a period in this section referred to as “the accounting period” ending on a date other than 31st December and such accounts are or will be accepted by the Commissioner-General for the purpose of determining the gains or profits of the business in respect of a charge year, in accordance with the provisions of this section and that company is required by any provision of this Act to submit a return of income, including a return of provisional income and tax, for that charge year, that return shall be of income, or provisional income, for the accounting period for which relevant accounts are or will be made up.

(3B) For purposes of sub-section (3A) “relevant accounts” in relation to any charge year means the accounts which are or will be submitted to the Commissioner-General for the purpose of determining the gains or profits of the business in question in respect of that charge year.

(4) Where the Commissioner-General has accepted the accounts of the business of a person or partnership pursuant to sub-section (1), and the business ceases, that person or partnership shall return for assessment accounts to include all income of the business in the period between the closing date of the last accounts so accepted for the immediately preceding charge year and the date when the business ceased.

(5) Where the period referred to in sub-section (4) exceeds twelve months, separate accounts shall be delivered for the period of twelve months ending on the date accepted under sub-section (1) as the closing date of the accounts of the business, and for the balance of the period in excess of twelve months.

(6) The income determined on the basis of the accounts referred to in sub-sections (4) and (5) is charged to tax as follows:

(a) where the period is in excess of twelve months, the income determined on the basis of the accounts delivered for twelve months, as required under sub-section (5), is deemed to be the income for the charge year succeeding that in which the income based on the accounts for the immediately preceding charge year was assessed, and the income for the remaining period is deemed to be income of the following charge year;

(b) where the period is one of less than twelve months, the income based on the accounts delivered under sub-section (4) is deemed to be the income of the charge year succeeding that in which the income based on the accounts for the immediately preceding year was assessed.

(7) Notwithstanding sub-section (6), where a person or partnership has delivered accounts for the assessment of his business, and the whole or part of the income determined on those accounts has been charged to tax in more than one charge year, then when the business ceases the income for the last charge year is reduced by an estimate determined by the Commissioner-General of the income which has been so charged to tax in more than one charge year, and if that estimate exceeds the income for the last charge year, then the income for the penultimate charge year shall be reduced by the amount of such excess.

(8) For the purposes of this section, a person may be assessed in respect of his income notwithstanding that he may not have been in existence during any part of the relevant charge year.

[S 62 am by Act 4 of 1976.]

62A. Averaging of farming and fishing income

Where a person or partnership carries on in two consecutive charge years a business of fishing or of farming, excluding the letting of property for such purpose, and irrevocably so elects by notice in writing to the Commissioner-General before the end of the charge year immediately following the end of the second such consecutive charge year, the income received from, or loss incurred in, such business in each of the two charge years shall be averaged, and the average income or loss shall be deemed to have been received or incurred in each of the two said charge years:

Provided that there shall be no right of election under this section where an election has already been made under this section in respect of one or two consecutive charge years in respect of the same income or loss.

[S 62A am by Act 17 of 1971, 14 of 1987.]

63. Commissioner-General's power to assess

(1) Subject to the provisions of sub-section (1A) and sections 72 and 93, the Commissioner-General shall assess every person who is liable to tax under this Act or who claims, or is entitled to, a deduction under section 30, 31, 32 or 36:

Provided that the Commissioner-General shall take into account the provisions of any agreement made under section 74, if applicable, and shall not include in any such assessment for any charge year—

(i) dividends from which tax in respect of that charge year has been deducted under section 81;

(ii) a lump sum payment from which tax in respect of that charge year has been deducted under section 82;

(iii) Obsolete;

(iv) in the case of a person who is not resident in the Republic for any charge year, public entertainment fee royalties, any management or consultancy fee or commission from which tax, in respect of that charge year, has been deducted under section 82A;

(v) in the case of a resident individual, interest from which tax in respect of that charge year has been deducted under section 82A and such tax deducted is the final tax for any individual, charitable institution, body, person or trust exempted under subparagraph (1) of paragraph 5 and subparagraph (1) of paragraph 6 of the Second Schedule;

(vii) in the case of a person exempted under subparagraph (1) of paragraph 5 and subparagraph (1) of paragraph 6 of the Second Schedule, interest from which tax in respect of that charge year has been deducted under section 82A.

(1A) In any case where a person has made payments of tax or provisional tax in respect of any charge year under section 46 or 46A if the Commissioner-General is satisfied that the person has no outstanding tax liability for that year, the Commissioner-General need not assess that person under this section, unless the person makes a request in writing for an assessment.

(1B) Where a person has made a return of tax under section 46 but is assessed under this section for any amount, the assessment shall not relieve that person of any liability under section 78 in respect of any failure to make any payment of tax.

(1C) Where a person has made payments of tax or provisional tax for a charge year but sub-section (1A) does not apply, the Commissioner-General shall make an assessment in respect of that year and that person only for the amount by which the payments made differ from the amount of tax due for that year.

(2) Subject to the provisions of sub-section (1) to (1C), an assessment shall be made in respect of every person for each charge year, and as many amended assessments may be made in respect of such person for any such charge year as are necessary to give effect to the provisions of this Act, and whereby his liability to tax may be increased, reduced or cancelled, as the circumstances require.

(3) Wherever for the purposes of this Act income is chargeable to tax in any charge year following the charge year in which it is received, the Commissioner-General may assess any person in respect of such income at any time and may make such assessment at the current rate of tax.

(4) The liability of any person to render a return or other information required under this Act for any charge year is not relieved because he is assessed for that charge year before such return or information is rendered.

(i) where the Commissioner-General does not have sufficient information on which to estimate an assessment, the Commissioner-General may assess a base tax of one hundred and fifty kwacha in any charge year; and

(ii) a credit shall be allowed for the amount of any base tax which has been paid in a charge year when establishing the amount of tax which is due and payable resulting from any subsequent assessment which the Commissioner-General may determine for the same charge year.

[S 64 am by Act 14 of 1994.]

64A. Standard assessment

(1) The Commissioner-General may make a standard assessment requiring any individual or partnership carrying on the business of operating a public service vehicle for the carriage of persons to pay a presumptive tax as set out in Part I of the Ninth Schedule.

(2) The Commissioner-General may make a standard assessment requiring any person carrying on any business, other than the business referred to in sub-section (1), with an annual turnover of eight hundred thousand kwacha or less to pay tax on turnover at the rate set out in Part II of the Ninth Schedule:

Provided that the provisions of this sub-section shall not apply to income earned from the provision of consultancy services or from mining operations or to income earned from a business that qualifies for voluntary registration under the Value Added Tax Act and is issued with a value added tax registration certificate.

(2) Save in case of fraud or willful default or for the purposes of section 21, 88, 91 or 113, or Part VII (which provides for double taxation relief), or paragraph (25) of the Fifth Schedule, or granting tax credits as provided in the Charging Schedule, no assessment shall be made for any charge year after six years from the end of that year.

(3) No assessment shall be made in respect of the income of any deceased person after the expiry of three years after the end of the charge year in which such deceased person died.

(4) An assessment made in accordance with generally prevailing practice is not affected by any change in that practice after the time for objection to the assessment has expired.

[S 65 am by Act 26 of 1970, 14 of 1976.]

66. Taxpaying agents

(1) For the purposes of this Act, a taxpaying agent is, in relation to income—

(a) of a company, any of the individuals mentioned in sub-section (1) of section 69;

(b) managed by an agent, the agent;

(c) remitted by a person or partnership in the Republic to a person who or partnership which is outside the Republic, the person or partnership remitting the income;

(d) of a trust, a trustee of the trust;

(e) of a person who has died, his executor or administrator;

(f) of a deceased's estate, the executor or administrator of the deceased person's estate;

(g) of a bankrupt's estate, the trustee in bankruptcy;

(h) of an incapacitated person, his trustee, guardian, curator, committee or receiver appointed by a court, as the circumstances of the case may require;

(i) of a company which is being wound up or is under judicial management, the liquidator or judicial manager.

(2) No provision concerning a taxpaying agent shall relieve any other person of any liability under this Act.

(3) Every reference in this Act to a taxpaying agent is to him only as such, save where otherwise provided.

[S 66 am by Act 23 of 1968, 14 of 1976.]

67. Assessment of taxpaying agent

(1) Every taxpaying agent, in respect of the income which he receives as an agent, shall be subject in all respects to the same duties, responsibilities and liabilities as if that income were received by him beneficially and is assessed and charged in his own name in respect of that income, but any such assessment is deemed to be made upon him as an agent.

(2) Any tax credits or deduction which might have been claimed by a person is allowed in the assessment made upon his taxpaying agent as such an agent.

Every taxpaying agent who pays tax in respect of income assessed on him is entitled to recover the amount or that tax from the person on whose behalf the tax is paid or retain out of any moneys that are or may come into his possession on behalf of that person so much as is necessary to indemnify him for the payment.

69. Company's taxpaying agent

(1) Where a company carries on business or has a place of business in the Republic, a director, the secretary or any individual concerned or appearing to be concerned in the management of the company's business, is that company's taxpaying agent (and where a company is being wound up or liquidated, the liquidator, receiver or manager of the company, is that company's taxpaying agent) and with necessary modifications the provisions of this Part relating to taxpaying agents apply accordingly.

(2) The Commissioner-General may require a company's taxpaying agent to answer for all such acts and matters as the company might be required to answer for under this Act, and, if the company's taxpaying agent defaults in this requirement, he is liable to such penalties as are provided for by this Act in the case of like default by an individual.

[S 69 am by Act 11 of 1973.]

70. Errors in form

No assessment, document or proceeding under this Act is invalid—

(a) for any error in a person's name, if the erroneous name is or may be understood to be that person's name, or the person has at any time been known by the erroneous name, or one like it; or

(b) for any other error or defect, if the assessment, document or proceeding is in substance in accordance with this Act.

PART VIPAY AS YOU EARN

71. Assessment, charge, collection and recovery

(1) On the making of any payment of, or on account of, any emolument, tax shall, subject to and in accordance with regulations made by the Minister, be deducted or repaid by the person or partnership making the payment, notwithstanding that when the payment is made no assessment has been made in respect of the emoluments, and notwithstanding that the emoluments are in whole or in part emoluments for some charge year other than the year during which the payment is made, and, for the purposes of this sub-section, payment shall be deemed to be made when the emolument is received as provided in section 5:

Provided that with reference to paragraph (1) of section 44 the requirements of this sub-section shall not apply to emoluments provided to employees in the form of non-money fringe benefits or to income, for an individual, on which turnover tax has been assessed in accordance with sub-section (2) of section 64A.

(2) Tax deducted, as reduced by any tax refunded, under sub-section (1), shall be payable to the Commissioner-General on the dates prescribed by the regulations made in accordance with sub-section (6) .

(3) Where the tax payable in accordance with sub-section (2) is not paid by the prescribed date, a penalty equal to five per centum of the amount of tax payable but not paid shall be chargeable thereto for each calendar month or part thereof for which, and to the extent that, such tax remains unpaid, and for the purpose of any regulations relating to collection and recovery of tax deducted under sub-section (1), such penalty shall be deemed to be tax deducted.

(5) The Commissioner-General may, in his discretion, remit the whole or any part of the penalty due under sub-section (3) .

(6) The Minister shall make regulations for the administration of this Part, and for the assessment, charge, collection and recovery of tax in respect of emoluments accordingly, and such regulations shall have effect notwithstanding anything in this Act.

(6A) Regulations under this section may create offences punishable with a fine not exceeding ten thousand penalty units for any failure to comply with the provisions of the regulations, other than a failure to which sub-section (3) applies.

(a) the total tax payable in respect of any emoluments for any charge year is deducted from the emoluments paid during the year; and

(b) the tax deductible or repayable on the occasion of any payment of, or on account of, emoluments is such that the total net tax deducted since the beginning of the charge year bears to the total tax payable for the year the same proportion that the part of the year which ends with the date of the payment bears to the whole year.

(8) In sub-section (6), the references to the total tax payable for the year shall be construed as references to the total tax estimated to be payable for the year in respect of the emoluments, subject to a provisional allowance for deductions and tax credit and subject also, if necessary to an adjustment for amounts overpaid or remaining unpaid on account of tax in respect of emoluments to which this section applies for any previous year.

(9) In estimating the total tax payable, it may be assumed, in relation to any payment of, or on account of, emoluments, that the emoluments paid in the part of the charge year which ends with the making of the payment will bear to the emoluments for the whole of that year the same proportion that part of the year bears to the whole year.

(10) For the purposes of this section emoluments shall include any annuity or part thereof as is not exempt from tax under paragraph 10 of the Second Schedule.

[S 71 am by Act 26 of 1979, 11 of 1974, 11 of 1975, 11 of 1992.]

72. Assessments not always necessary

(1) Subject to the provisions of this section, no assessment need be made on an individual in respect of his emoluments for any charge year if the total net tax deducted in the year in question from his emoluments is the same as it would have been if all the relevant circumstances had been known to all parties throughout the year, and deductions and repayments had, throughout the year, been made accordingly, and had been so made by reference to cumulative tax tables.

(2) In sub-section (1)—

(a) “cumulative tax tables” means tax tables devised under the last preceding section so as to require the tax to be deducted or repaid on each payment in the year to be ascertained by reference to a total of emoluments paid in the year up to the time of making that payment; and

(b) references to the total net tax deducted shall be construed as references to the total tax deducted during the year by virtue of regulations made under the last preceding section, less any tax repaid by virtue of any such regulations.

(3) Nothing in this section shall be construed as preventing an assessment being made on an individual in respect of his emoluments and, without prejudice to this generality, an assessment shall be made in respect of an individual's emoluments for any charge year if—

(a) the individual assessable, by notice in writing given to the Commissioner-General within five years from the end of the charge year, so demands; or

(b) the Commissioner-General so elects.

(4) In any proceedings in regard to an assessment made under sub-section (3), that assessment shall be treated as having been made in accordance with the practice generally prevailing at the end of the year to which the assessment relates.

73. Priority on insolvency

In the distribution of the property of a bankrupt and in the distribution of the assets of any company being wound up, any sums due on account of tax deducted under this Part shall be paid as if such sums were tax within the meaning of section 3(d) of the Preferential Claims in Bankruptcy Act, or the corresponding provision of any Act replacing that Act.

PART VIIDOUBLE TAXATION RELIEF

74. Double taxation agreements and mutual assistance in tax matters

(1) The President may enter into an agreement, which may have retrospective effect, with the Government of any other country or territory—

(a) to prevent, mitigate or discontinue the levying, under the laws of the Republic and of such other country or territory, of taxes in respect of the same income; or

(b) for the exchange of information on tax matters or for mutual assistance in tax matters with the objective of rendering reciprocal assistance—

(i) in the determination of credits and exemptions in respect of Zambian tax and foreign tax;

(ii) in the provision of data on fraud, civil and criminal tax offences;

(iii) in the administration and collection of taxes under the tax laws of the Republic and such other country or territory;

(iv) in the carrying out of tax examinations in Zambia or abroad; and

(v) in the carrying out of simultaneous or joint tax examinations.

(2) Any information received by a country or territory under an agreement entered into under sub-section (1) shall be treated as secret in the same manner as information obtained under the domestic laws of that country or territory and shall be disclosed only to persons or authorities involved in the assessment, collection enforcement, prosecution or determination of appeals in relation to, the taxes under this Act.

(3) Sub-section (2) shall not be construed so as to impose on a country or territory the obligation to—

(a) carry out administrative measures at variance with the laws and administrative practices of that country or territory;

(b) supply information which is not obtainable under the laws of that country or territory or under the laws of Zambia; or

(c) supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

(4) The Minister shall lay a copy of an agreement referred to in sub-section (1) before Cabinet for approval.

(5) The President shall, as soon as practicable after the conclusion and approval of any agreement under this section, notify the public of the terms of the agreement by statutory instrument, and the agreement shall, from the date of commencement of the statutory instrument, have effect as if enacted under this Act as long as the agreement has the effect of law in the other country or territory.

(1) This section applies where, by virtue of any agreement under this Part, tax (in this section called foreign tax) payable to another country in respect of any income (in this section called foreign income) is to be allowed as a credit against Zambian tax in respect of that foreign income.

(2) The Zambian tax for any charge year in respect of foreign income is reduced by the amount allowed as a credit in respect of that foreign income under any agreement under this Part, but that reduction shall not exceed the amount of that foreign income included in the income liable to tax under this Act, multiplied by the Zambian tax before the reduction, divided by the sum of the income assessable under this Act and the income which the Commissioner-General is prohibited from including in an assessment under the provisos to sub-section (1) of section 63.

(3) In this section, “Zambian tax” means income tax chargeable under this Act.

[S 75 am by Act 16 of 1972.]

76. Unilateral double taxation relief

(1) Where a person is liable to pay Zambian tax for any charge year in respect of income received from a source within a country which has not entered into an agreement under this Part (in this section called foreign income) and he has paid tax on that income in the country from which it was received (in this section called foreign tax), then the Zambian tax for that charge year in respect of the foreign income is reduced by the amount of foreign tax, but that reduction shall not exceed the amount of the foreign income included in the income liable to tax under this Act, multiplied by the Zambian tax before the reduction, divided by the sum of the income assessable under this Act and the income which the Commissioner-General is prohibited from including in an assessment under the provisos to sub-section (1) of section 63.

(2) In this section, “Zambian tax” means income tax chargeable under this Act.

(3) This section shall not apply to income which the Commissioner-General is prohibited from including in an assessment under the provisions to sub-section (1) of section 63.

[S 76 am by Act 16 of 1972.]

PART VIIICOLLECTION, RECOVERY, REFUND AND RELIEFS

77. When tax due is payable

(1) Subject to the provisions of this Act, tax for any charge year payable by any person required to submit a return under section 46 in respect of any income shall be due and payable on 30th June immediately following the end of the charge year.

(1B) Any person who is required by section 46A to submit a return of provisional income and tax for any charge year shall make payments of provisional tax to the Commissioner-General in accordance with sub-sections (1C) to (3) .

(1C) Provisional tax for any charge year required to be paid under sub-section (1B) shall be paid during the charge year in four installments, each one of which shall be equal to one quarter of the amount of provisional tax shown in the return and shall be paid as follows:

(a) 1st installment, on 31st March;

(b) 2nd installment, on 30th June;

(c) 3rd installment, on 30th September; and

(d) 4th installment, on 31st December;

of the charge year to which such return of provisional income relates.

(ID) Notwithstanding sub-section (1C), provisional tax required for the charge year ending 31st December 2012, liable to be paid under sub-section (IB), shall be paid during the charge year in three installments, each one of which shall be equal to one third of the amount of provisional tax shown in the return and shall be paid as follows:

(2) Any person who is liable to pay any provisional tax in accordance with sub-section (1B) for any charge year may deduct from the amount due any amount of tax or provisional tax agreed by the Commissioner-General to have been overpaid and which has not been refunded to that person or otherwise taken into account.

(i) be made in installments on the dates specified in sub-section (1D); and

(ii) be equal in amount to the amount of provisional tax shown in the return divided by three:

Provided that where an installment payment has been made before an installment of a revised amount is due under this sub-section, the amount of that revised installment shall be increased or reduced, as the case may require, to take into account the excess or shortfall in the earlier payment or payments.

(4) Any tax payable by any person under an assessment made under sub-section (3) of section 63 or section 64 shall be due and payable on the date notice of the assessment is given to the person under section 65.

(5) The Commissioner-General, may extend the time limited by sub-sections (1), (1C), (1D) and (4) and where a time limit has been extended under this sub-section, any reference elsewhere in this Act or any regulations made under it to the time when any payment of tax or provisional tax is due shall be construed as a reference to the time as so extended.

(2) Any person who fails to pay tax or provisional tax in accordance with section 77 shall be liable to pay, in respect of each month or part thereof during which that amount any part of it remains unpaid, an amount equal to five per centum of that amount or so much of it as remains unpaid during the month in question.

(3) Where any person contravenes more than one provision of this Act in respect of tax or provisional tax on the same income in respect of the same period of time that person shall, under this section, be liable to pay only one penalty in respect of that contravention.

(8) In the event of any refund of tax or any part thereof, the penalties imposed under this section shall be reduced to the extent that the tax to which the penalties relate is set off or refunded and the amount of such reduction shall be deemed to be tax paid in excess to which the provisions of section 87 shall apply.

[S 78 am by Act 26 of 1970, 16 of 1972,11 of 1975, 14 of 1976, 9 of 1977, 12 of 1982,11 of 1992; s 78(10) rep by s 7(a) of Act 1 of 2001 w.e.f. 1 April 2001279.]

78A. Interest on overdue payments

(1) Subject to sub-section (3), any payment of tax which is overdue as specified in regulations made under section 71 or under section 78 shall attract interest at the rate prescribed in sub-section (2) and shall continue to attract such interest until such time as the payment of the tax has been remitted.

(1) Tax is a debt due to the Government and may be recovered by the Commissioner-General either by distress or by suit in any court of competent jurisdiction.

(2) Notwithstanding the other provisions of this Act, where tax is found to be owing to the Republic under this Act the Commissioner-General may, by notice in writing issued to any individual or person, fix a date for the payment of such tax:

Provided that where payment of the tax referred to in this section is to be made by installments, the Commissioner-General may set different dates for the payment of such tax.

(1) Any officer appointed for the purpose of carrying out the provisions of this Act may, under warrant by the Commissioner-General, levy distress upon the goods and chattels of the person or partnership from whom tax is recoverable.

(2) For the purposes of levying any such distress, the officer authorised under warrant by the Commissioner-General, together with such servants or agents as the officers may consider necessary, may break open at any time between sunrise and sunset, any premises; and the officer so authorised may require any police officer to be present while such distress is being levied and any police officer so required shall comply with such requirement.

(3) A distress levied under this section shall be kept for ten days either at the premises at which such distress is levied or at such other place as the person authorised under warrant may consider appropriate at the cost of the person or partnership from whom such tax is recoverable.

(4) If the person or partnership from whom such tax is recoverable does not pay the tax due together with the costs incurred in levying the distress and all other costs incidental thereto within the period of ten days mentioned in sub-section (3), the goods and chattels upon which distress has been levied shall be sold by public auction, sealed tender or bids and the proceeds realised from such sale shall be applied towards the payment of the said costs and all further costs incurred in completing such sale and, the surplus, if any, shall be applied in the payment of the tax and, the balance, if any, shall be paid to such person or partnership after deducting any further tax liable to be paid by such person or partnership.

(5) Where the full amount of the tax due and all the costs mentioned in sub-section (4) are not recovered, the Commissioner-General may recover the deficiency either in accordance with section 79B or any other provisions contained in this Act.

(6) No civil or criminal proceedings shall be instituted against any officer for any act or omission arising out of the levying of distress.

(7) If the person or partnership upon whose goods or chattels distress is to be levied, or has been levied, fraudulently removes and conveys away such goods or chattels to prevent the Commissioner-General from dis-training them or completing the distress so levied, or if any person or partnership willfully and knowingly aids or assists such person or partnership in such fraudulent conveying away or carrying off any part of such goods or chattels or in concealing the same, every person or partnership so offending—

(a) shall forfeit to the Commissioner-General a sum equal to double the value of goods or chattels carried off or concealed as aforesaid, to be recovered by action; and

(b) shall be guilty of an offence and liable on conviction to a fine not exceeding ten thousand penalty units or to imprisonment for a term not exceeding twelve months, or to both.

[S 79A am by Act 17 of 1971, 14 of 1974, 14 of 1976, 9 of 1977, 11 of 1992, 13 of 1994.]

79B. Recovery through court

(1) Notwithstanding anything to the contrary contained in any law, the Commissioner-General may institute proceedings in any subordinate court of the first or second class for the recovery of any tax or other amount recoverable under this Act.

(2) Any officer appointed for the purposes of carrying out the provisions of this Act may represent the Commissioner-General in the proceedings referred to in sub-section (1) and for that purpose may conduct any such proceedings and shall have a right of audience in subordinate courts of the first or second class, notwithstanding any law to the contrary.

(3) Proceedings in any court for the recovery of any tax or other amount are deemed to be proceedings for the recovery of a debt validly acknowledged in writing by the debtor.

(4) In any proceedings for the recovery of tax—

(a) it is not competent to question any assessment whether or not an objection or appeal has been made against such assessment; and

(b) the mere production of an assessment or any document under the Commissioner-General's hand or the hand of any officer duly authorised by him is conclusive evidence as to the contents of the assessment or document.

[S 79B am by Act 17 of 1971.]

79C. Charge on land

(1) Notwithstanding anything to the contrary contained in any other law, where a person or partnership from whom tax is due is the owner of land situated in the Republic, the Commissioner-General may give notice to the person or partnership in writing that the amount of tax due shall be a charge on such land and such charge shall be effective from the date of service of the notice for so long as such land remains in the ownership of such person or partnership or until the notice is withdrawn.

(2) For the purposes of this section, “land” includes any vacant piece or parcel of land and also any buildings or improvements on any piece or parcel of land.

[S 79C am by Act 17 of 1971, 14 of 1976.]

79D. Recovery of partner's tax from partnership

Where the tax due by a person relates in whole or in part to tax charged on income derived from a partnership, the tax charged on such income shall, where notice in writing to this effect is given by the Commissioner-General to the partnership, be due from such partnership and the provisions of this Act relating to collection and recovery shall apply as if such tax had been charged on the partnership.

(1) Subject to the provisions of this section, every company incorporated in the Republic shall deduct from every payment of dividend, other than a dividend paid to Government, tax at the rate specified in Annexure “H” of Part III of the Charging Schedule, or as the Commissioner-General directs to—-

(a) give effect to the provisions of any agreement made under section 74; or

(b) give effect to the provisions of the Second Schedule;

and shall account for such tax as if the payment were subject to Part VI (which relates to Pay As You Earn); and for the purposes of this sub-section payment shall be deemed to be made on the day the dividend accrues to the share or stock holders as provided in sub-section (2) of section 5.

(2) Subject to the provisions of this section, where, in a charge year a company has received dividends from which tax has been deducted under sub-section (1), the total amount which the company is liable to account for under sub-section (1) on dividends paid in the charge year shall, as far as possible, be reduced by the amount of the tax so deducted, and the company shall be liable to account only for the balance remaining after such reduction.

(3) Subject to the provisions of this section, where the total amount of tax deducted from dividends in a charge year as referred to in sub-section (2) exceeds the amount which a company is liable to account for on dividends paid in the charge year before the operation of sub-section (2), the excess shall, as far as possible, be deducted from the total amount which the company is liable to account for on dividends paid, after the operation of sub-sections (2), in the following charge year and so on from year to year until the excess is extinguished.

(4) Where in any charge year after the operation of sub-section (2) and (3) there is an excess available to be deducted in accordance with sub-section (3) from the amount which a company is liable to account for in the following or a subsequent charge year and the company was directed by the Commissioner-General to deduct tax from dividends paid in the charge year in accordance with paragraph (a) or (b) of sub-section (1), then the difference between what the company would have been liable to account for but for the said direction and the amount the company is liable to account for before the operation of sub-sections (2) and (3) (not exceeding the amount of excess available), shall be deemed to be tax paid in excess to which the provisions of section 87 shall apply and the excess available to be deducted in the following or a subsequent charge year shall be reduced by the amount so treated as tax paid in excess.

(5) Every company, upon payment of a dividend as provided in sub-section (1), shall furnish the share or stock holder to whom the dividend is paid with a certificate stating in relation to the dividend—

(a) the share or stock holder's name and address;

(b) the date of payment;

(c) the amount of dividend payable before the deduction of tax;

(d) the amount of tax deducted;

(e) the net amount paid; and

(f) such other particulars as the Commissioner-General may by notice in writing require;

and shall send a copy of the certificate to the Commissioner-General.

(6) The certificate furnished under sub-section (5) shall be treated as if it were an assessment for the purpose of Part XI only, and the date of service shall be deemed to be ten days after the date of payment shown thereon.

(1) Every person or partnership on making any payment on or after 1st April, 1998, to or on behalf of a non-resident contractor in respect of construction or haulage operations, irrespective of whether such payment is made outside the Republic or not, shall, before making any other deductions whatsoever, deduct tax from such payment at the specified in the Charging Schedule and that person or partnership shall account for such tax as if it were a payment subject to Part VI of the Act.

(i) an individual, who is neither resident nor ordinarily resident in the Republic; or

(ii) any other person or partnership who is not resident in the Republic and who does not have a permanent establishment in the Republic;

(b) a partnership shall be resident in the Republic—

(i) if the partners are resident or ordinarily resident in the Republic; or

(ii) if they are not all resident or ordinarily resident in the Republic, where the majority of the partners are resident or ordinarily resident in the Republic;

(c) “construction operations” include—

(i) the erection, alteration, maintenance, repair, extension or demolition of any building or structure, whether permanent or not;

(ii) the installation in any building or structure of heating, elevators, air conditioning, ventilation, power, drainage, sanitation, water or fire protection, or like supplies or services;

(iii) the painting or decorating of the internal or external surfaces of any build in or structure;

(iv) any operations which are an integral part of, or prior to, or which render complete, the operations described in paragraphs (i) to (iii) of this sub-section; and

(d) “haulage operations” includes transportation by land, water or air of persons, livestock or nay goods whatsoever including farm produce, or produce of a like nature, ores and minerals, food stuffs and merchandise.

(1) In this Act, “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on, and includes—

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or other place of extraction or exploitation of natural resources;

(g) a building site, a construction, assembly or installation project or any supervisory activity in connection with the site, project or activity, but only where that site, project or activity continues for a period of more than one hundred and eighty-three days;

(h) a place where an enterprise provides services, including consultancy services, through employees or other personnel engaged by the enterprise for that purpose within the Republic for a period or periods exceeding in the aggregate ninety days in any twelve month period commencing or ending in the fiscal year concerned;

(i) in relation to an individual, a place where the individual performs services in the Republic for a period or periods aggregating more than ninety days within any twelve-month period commencing or ending in the fiscal year concerned; and

(j) an installation or structure continuously used for the exploration for natural resources for a period of not less than one hundred and eighty-three days.

(a) the use of facilities solely for storage, display or delivery of goods or merchandise belonging to an enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to an enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to an enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; or

(f) the maintenance of a fixed place of business solely for any combination of activities referred to in paragraphs (a) to (e), if the overall activity of the fixed place of business resulting from the combination is of a preparatory or auxiliary character.

(3) Notwithstanding sub-sections (1) and (2), a person, other than an agent of an independent status to whom subsection (4) applies, acting on behalf of an enterprise and habitually exercising in the Republic an authority to conclude contracts on behalf of the enterprise, shall be deemed to have a permanent establishment in the Republic in respect of any activities which that person undertakes for the enterprise, unless the activities of that person are limited to those mentioned in subsection (2) which, if exercised through a fixed place of business, would not make the fixed place of business a permanent establishment under the provisions of that subsection.

(4) An enterprise of another country shall not be considered to have a permanent establishment in theRepublic merely because it carries on business in the Republic through a broker, general commission agent or any other agent of an independent status, if the persons are acting in the ordinary course of their business.

(5) Where the activities of an agent referred to in subsection (4) are devoted wholly or almost wholly on behalf of that enterprise, and conditions aremade or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which should have been made between independent enterprises, the agent shall not be considered an agent of an independent status within the meaning of this subsection.

(6) Notwithstanding subsections (1), (2),(3), (4) and (5), an insurance enterprise of another country shall, except with regard to re-insurance, be deemed to have a permanent establishment in the Republic if it collects premiums within the Republic or insures risks situated in the Republic through a person other than an agent of an independent status to whom sub-section (4) applies.

(7) The fact that a company which is a resident of the Republic controls or is controlled by a company which is a resident of another country, or which carries on business in the other country,whether through a permanent establishment or otherwise, shall not of itself constitute either company a permanent establishment of either country.

(1) Where any person, institution or authority is empowered by any written law or otherwise to register the transfer to any property, that person, institution or authority shall not register the transfer unless the person or partnership transferring the property produces a tax clearance certificate issued to them for the purpose of the transfer.

(2) Any person, institution or authority empowered to issue a trading licence under the Trades Licensing Act or any other written law shall not issue the trading license to any applicant unless the applicant produces a tax a clearance certificate.

(3) Any person, institution or authority empowered to issue a permit or mining licence under the Mines and Minerals Development Act, shall not issue the permit or licence to any applicant unless the applicant produces a tax clearance certificate.

(4) A person, partnership, institution, organization, or association shall not transact with a supplier of goods or services unless the supplier produces a tax clearance certificate issued pursuant to sub-section (2):

(5) The Commissioner-General may by notice in writing cancel a tax clearance certificate and the cancellation shall have effect from the date of service of the notice on the holder of the tax clearance certificate.

(6) The holder of a tax clearance certificate shall, within thirty days after the date of service and of the notice of cancellation of the certificate, return the certificate to the Commissioner-General.

(7) For purpose of this section—

“mining licence” means a small scale or large scale gemstone licence, or a small scale or large scale mining licence;

[Subs by Act 27 of 2009 w.e.f. 1 April 2010.]

“permit” means a prospecting licence;

“property” has the meaning assigned to it in the Property Transfer Tax Act; and

“tax clearance certificate” means a certificate issued by the Commissioner-General, valid for such period as may be specified in it, stating that the person or partnership to whom or to which it is issued fulfilled all obligations imposed upon them or it by this Act and by any other Act for which the Commissioner-General is responsible or has made arrangements satisfactory to the Commissioner-General for doing so.

(1) Subject to sub-section (3), every person or partnership importing goods for commercial purposes shall pay an advance tax on income in respect of those goods at the port of entry at the rate specified in the Charging Schedule:

Provided that the provisions of this sub-section shall not apply to goods which are imported for personal use.

(2) At the end of each charge year, any person who or partnership that has paid the advance tax referred to in sub-section (1) shall submit the receipt issued in respect of the payment with the returns made under section 46.

(1) Every person or partnership on making payment from an approved fund of a lump sum payment shall, before making any other deductions, deduct tax from such part of the payment as is liable to tax at the rate specified in the Charging Schedule and that person or partnership shall account for such tax as if the payment were subject to Part VI (which relates to Pay As You Earn) and for the purposes of this sub-section payment shall be deemed to be made when the income is received by the recipient as provided in section 5.

(2) Every person or partnership on making a payment referred to in sub-section (1) shall furnish the person or partnership to, or on behalf of whom it is made with a certificate stating, in relation to the payment—

(a) the title of the approved fund;

(b) the date of approval of the fund;

(c) the date of the payee's admission to the fund;

(d) the date of change in contribution rates if increased since 30th June, 1960;

(e) the payee's name and address;

(f) the date of payment;

(g) the gross amount of the payment;

(h) the amount of tax deducted under sub-section (1);

(i) the net amount of the payment; and

(j) such other particulars as the Commissioner-General may, by notice in writing, require; and shall send a copy to the Commissioner-General.

[S 82 am by Act 26 of 1970, 11 of 1974, 14 of 1976.]

82A. Deduction of tax from certain payments

(1) Subject to the provisions of this section, a person or partnership making a payment of—

(a) a management or consultant fee deemed under section 18 to be from a source within the Republic;

(b) interest and royalties from a source within or deemed under section 18 to be within the Republic;

(c) rent from a source within the Republic;

(d) commissions, other than commissions received by an individual whose income is from employment or office;

(e) a public entertainment fee to, or on behalf of, a person or persons in partnership not resident in the Republic;

(f) commission deemed under section 18 to be from a source within the Republic;

(g) winnings from gaming, lotteries and betting; or

(h) branch profits,

irrespective of whether the payment is made outside the Republic shall, before making any other deduction, deduct tax from the payment referred to in paragraphs (a) to (h) at the rate specified in the Charging Schedule or as the Commissioner-General may direct to give effect to the provisions of any agreement made under section 74 or the provisions of the Second Schedule.

(2) A person or partnership to whom subsection (1) applies shall account for tax as if the payment were subject to Part VI and for the purposes of this subsection, payment shall be deemed to be made when the income is received by the recipient as provided in section 5, except that—

(a) this section shall not apply to interest payable on a bill of exchange drawn for 180 days or less;

(b) the payment of an amount in excess of the original issue price for any treasury bill or similar financial instrument sold at a discount from face value which shall be deemed for the purposes of this section to be payment of interest when the treasury bill or any other similar financial instrument is presented for redemption or rediscount;

(c) the Commissioner-General may determine that the provisions of paragraph (b) or (d) of subsection (1) shall not apply in any particular case and shall, in writing, notify the person or partnership concerned that the provisions of paragraph (b) or (d) of subsection (1), as applicable, shall not apply to such person or partnership to the extent and to the period specified in such notification; and

(d) in the case of paragraph (b) of subsection (1), the direction to be issued under paragraph (c) shall only be for interest arising from a property linked unit of a property loan stock company.

(3) Every person or partnership shall, on making the payment referred to in sub-section (1), record on the form prescribed by the Commissioner-General the amount of the payment, the amount of tax deducted therefrom and such other particulars as the Commissioner-General may require.

(4) Within 14 days from the end of the month in which payment from which tax is required to be deducted under sub-section (1) was made, the person or partnership making the payment, shall forward to the Commissioner-General the form referred to in sub-section (2) together with a statement and declaration in the form prescribed by the Commissioner-General.

(5) Within 14 days of the end of the month in which any payment under sub-section (1) is made, the person or partnership making the payment shall furnish each person or partnership to or on behalf of whom a payment has been made with a certificate stating the amount of the payment made to or on behalf of such person or partnership, the amount of tax deducted therefrom, the date of issue of the certificate and such other particulars as the Commissioner-General may require;

(6) The certificate issued under sub-section (4) shall be treated as if it were an assessment for the purposes of Part XI only, and the date of service shall be deemed to be fourteen days after the end of the charge year in which the payment to which the certificate relates was made;

(7) For the purposes of this section “rent” means a payment in any form, including a fine, premium or any like amount, made as a consideration for the use or occupation of or the right to use or occupy any real property including personal property directly connected with the use or occupation of, or the right to use or occupy such real property.

(8) Any person who, or partnership which, receives from the Commissioner-General a receipt showing that such person or partnership has deducted tax under this section from any payment of rent shall, within fourteen days from the day of receiving such a receipt, furnish that receipt to the payee of the rent.

(9) Where a person fails to furnish the Commissioner-General or any other person authorised by the Commissioner-General with any document in accordance with the requirements of this section, there shall be charged a penalty of-

(a) in the case of an individual one hundred and seventy penalty units per month or part thereof during which such failure continues; or

(b) in the case of a company, three hundred and forty penalty units per month or part thereof during which such failure continues:

Provided that the Commissioner-General may remit the whole or part of any such penalty.

[S 82A am by Act 11 of 1973, 11 of 1974,11 of 1975, 14 of 1976, 9 of 1977, 11 of 1984, 11 of 1985, 8 of 1986, 14 of 1987, 17 of 1988, 11 of 1992, 4 of 1993, 14 of 1994, 2 of 1995.]

82B. Definition of property

For the purposes of sections 83, 84 and 86, “property” shall include moneys, cheques, promissory notes and all other kinds of bills of exchange, and movable and immovable property of whatsoever nature and kind.

[S 82B am by Act 17 of 1971.]

83. Property not in possession

Any person or partnership who holds or is in possession of any kind of property whatsoever on behalf or on account of another person or partnership shall give the Commissioner-General all such information in relation to that property as the Commissioner-General may require, and, in relation to any tax due by that other person or partnership, the Commissioner-General's rights in regard to any such property are the same and may be exercised in as full and ample a manner as if the property were held or in the possession of that other person or partnership.

[S 83 am by Act 14 of 1976.]

84. Agent for payment of tax

(1) Any person or partnership may be declared by the Commissioner-General to be an agent for the payment of tax due by another person or partnership.

(2) Any person or partnership declared to be an agent in pursuance of sub-section (1) shall apply to the payment of the tax due so much of any kind of property whatsoever held by him or coming into his hands on behalf of the person or partnership from whom the tax is due as is sufficient to pay such tax, and any such agent is hereby indemnified against any person or partnership whatsoever in respect of all payments so made by him.

(3) Where the Commissioner-General has reasonable grounds to believe that a person or partnership has disposed of any kind of property whatsoever without full consideration in money or money's worth to another person or partnership with the intention of avoiding payment of tax that is or may become due, he may declare such other person or partnership an agent for the payment of tax due from the person or partnership which has disposed of the said property and such property shall, for the purposes of sub-section (2), be deemed to be property held by such other person or partnership on behalf of the person or partnership which has disposed of the said property to the extent that the open market value of the said property at the time of the disposal exceeds the consideration given.

(4) Any person or partnership declared by the Commissioner-General to be an agent for the payment of tax due by another person or partnership under the provisions of any previous enactment shall be deemed to have been declared an agent under the provisions of sub-section (1) .

(5) Notwithstanding the other provisions of this section, where a shareholder of a company is absent from Zambia the company shall be deemed to have been declared an agent for the payment of tax due by the shareholder under sub-section (1):

Provided that this sub-section shall not apply to a company the ordinary share capital of which may be bought or sold on a stock exchange or which is controlled by any such company or any company controlled directly or indirectly by Government.

(6) Any person who willfully obstructs or willfully attempts to obstruct an agent in the execution of the duties imposed upon him by this section shall be guilty of an offence and shall, upon conviction, be liable to a fine not exceeding thirty thousand penalty units or to imprisonment for a term not exceeding three years, or to both.

[S 84 am by Act 17 of 1971, 11 of 1974, 14 of 1976, 9 of 1977, 11 of 1992, 13 of 1994.]

Every person who or partnership which is an agent in accordance with the provisions of section 66 or declared to be an agent in accordance with the provisions of section 84 and who or which alienates or charges any kind of property whatsoever from which tax ought to have been paid by such person or partnership shall be liable for such tax as if it were tax charged on that person or partnership.

[S 86 am by Act 14 of 1976.]

87. Refunds in general

(1) Where for any charge year any person or partnership claims that tax has been paid or is deemed to have been paid by deduction or otherwise in excess of the amount—

(a) liable to be paid by the person or partnership in accordance with the provisions of this Act;

(b) deductible by the person or partnership in accordance with the provisions of this Act;

(c) liable to be paid by the person or partnership because relief is due in accordance with the provisions of sections 76, 88, 89, 90, 90A, 91, 95, 95D, or 113;

the Commissioner-General shall make such assessments or adjustments as are necessary to determine the amount of such excess and shall give written notice to the person or partnership of the amount so determined as paid or deemed to have been paid in excess.

(2) A claim under sub-section (1) shall be made in accordance with the provisions of the section or Schedule under which it is made, or if none, the claim shall be made in writing to the Commissioner-General not later than six years after the end of the charge year to which the claim relates, or if later, six years after the date of service of the notice of assessment or of the notification of an amount of tax deductible under the provisions of this Act in the charge year, to which the claim relates.

(3) Where any tax is due and payable to the Commissioner-General for any charge year under this or any other Act, the amount of the excess shall first be applied towards the satisfaction of the tax so due and payable to the extent of such tax, and the Commissioner-General shall give written notice to the person or partnership of the amount so applied:

Provided that—

(i) such part of the excess which relates to tax paid by deduction shall be deemed to be available for application on the last day of the charge year to which the excess relates; and

(ii) subject to the provisions of section 95D, such part of the excess which relates to tax paid or deemed to have been paid other than by deduction shall be available for application on the day such part was paid or deemed to have been paid.

(4) Where any person or partnership claims a refund of the amount of the excess adjusted in accordance with the provisions of sub-section (3), the Commissioner-General shall refund such adjusted excess.

(5) A claim under sub-section (4) shall be made in writing to the Commissioner-General not later than six years after the end of the charge year to which the excess relates or, if later, six years after the date of service of the written notice of the amount of the excess given in accordance with the provisions of sub-section (1) .

(6) Notwithstanding sub-section (1) to (5), where a person, pursuant to subsection (1), claims that the pay-as-you-earn tax for any charge year has been paid or is deemed to have been paid in excess by deduction or otherwise, that person shall make the claim, in writing, or by way of return to the Commissioner-General, not later than six years after the end of the charge year to which the claim relates.

(1) Where under any will or settlement, other than a settlement to which section 19 or section 97 applies, any income (in this section referred to as the trust income) arising from any fund is accumulated for the benefit of any individual contingently on his attaining some specified age or marrying, then, if such individual claims and the Commissioner-General determines that such contingency has happened, the sum equal to the amount by which the total amount of tax paid on the trust income during the period of accumulation exceeds the total amount of additional tax which would have been paid by him during such period if such trust income and the income from any other fund subject to the like trust for accumulation has been included in his income shall be deemed to be tax paid in excess to which the provisions of section 87 shall apply; but in calculating such sum a deduction shall be made in respect of any tax paid by the trust and already repaid to him.

(2) Every claim under this section shall be made in writing to the Commissioner-General within six years after the expiry of the charge year in which the contingency happened.

[S 88 am by Act 14 of 1976.]

89. Refund or set-off of tax chargeable on a beneficiary

Where a beneficiary entitled to the whole or part of the income of a trust or deceased's estate is assessed and chargeable to tax for any charge year in respect of that income, any tax paid by a trust or deceased's estate and attributable to the income so assessed and charged on the beneficiary shall be set off against the tax chargeable for that charge year on the beneficiary and the provisions of section 87 shall apply to any amount so paid in excess of such tax chargeable.

[S 89 am by Act 14 of 1976.]

90. Refund or set-off of tax deducted from dividends, etc.

The amount of tax deducted from or paid under sections 81, 81A, 82 or 82A on income received by a person for any charge year shall be set-off against the tax chargeable on his income for that charge year and the provisions of section 87 shall apply to any tax so deducted or paid in excess of the tax so chargeable:

(i) subject to paragraph (ii), where the amount of tax which a company is required by sub-section (1) of section 81 to account for any charge year is reduced by an amount of tax which has been deducted from the dividends received by the company in that year, the amount of tax on income from dividends received by the company in that year which may be set off under this section against the tax chargeable on the company's income for that year shall be the balance of that tax after any such reduction.

(ii) in the case of a person who is not resident in the Republic for a charge year and who receives dividends in such charge year, subject to the provisions of any agreement under section 74, the tax deducted under section 81 shall not be set off or refunded;

(iii) in the case of a person who receives a lump sum payment, the tax deducted under section 82 shall not be set off or refunded;

(iv) in the case of a person who is not resident in the Republic for a charge year and who receives interest, royalties, management or consultant fees, or public entertainment fees in such charge year, subject to the provisions of any agreement made under section 74, the tax deducted under section 82A shall not be set off or refunded.

[S 90 am by Act 11 of 1975, 4 of 1976, 9 of 1978, 10 of 1979.]

90A. Job credits

The Minister may, by statutory order, provide for the granting of job credits in such amounts, for such periods and for such employees of such businesses as may be prescribed therein:

Provided that any such order may be made with retrospective effect.

[S 90A am by Act 6 of 1980.]

90B. …

[S 90B rep by Act 9 of 1977.]

91. Error or mistake relief

(1) If any person alleges that an assessment is excessive by reason of some error or mistake in the return or statement made by him for the purposes of the assessment, he may, at any time, not later than six years after the end of the charge year in respect of which the assessment was made, make an application in writing to the Commissioner-General for relief.

(2) On receiving any such application, the Commissioner-General shall inquire into and determine the matter and shall, subject to the provisions of this section make any assessment or other adjustment necessary to give effect to such determination and the provisions of section 87 shall apply to any tax paid in excess as a result of such determination.

(3) In determining any application under this section, the Commissioner-General shall have regard to all the relevant circumstances of the case, and in particular shall consider whether the granting of relief would result in the exclusion from the charge to tax of income of the applicant, and for this purpose the Commissioner-General may take into consideration the liability of the applicant and assessments made upon him in respect of the other years.

[S 91 am by Act 26 of 1970, 14 of 1976.]

92. Remission of tax

(1) The Commissioner-General may remit tax if he is satisfied that it is not recoverable; and where the person to be charged with tax is also subject to equity levy under the Equity Levy Act, 1982, and the amount of the equity levy is greater than the amount of tax payable under this Act, the Commissioner-General shall remit such tax.

(2) On the Commissioner-General's recommendation the Minister may remit tax if he is satisfied that it is just to do so.

(3) This section shall not give rise to any appeal or other proceedings.

[S 92 am by Act 23 of 1968, 12 of 1982.]

92A. Reduction in tax for tax free zones

The Minister may, by Statutory Instrument, exempt from, or reduce the payment of corporate tax, income tax and withholding tax on dividends for investors in manufacturing, agriculture, commercial banking and insurance who operate in an area declared a tax free zone under the Customs and Excise Act to such an extent as may be specified in that statutory instrument.

[S 92A ins by s 2 of Act 8 of 2001.]

93. Tax less than K20,000 not payable

Notwithstanding anything contained in this Act, no tax in respect of a charge year shall be payable by a person if the tax with which the person is chargeable in respect of that year is less than one hundred kwacha.

94. No set-off or refund where that is the object of change of ownership of shares in company

The Commissioner-General shall not allow any set-off or refund of tax deducted under section 81 where he determines that the object, or one of the objects of a change in the ownership of shares in a company, whether direct or indirect, was to obtain such set-off or refund.

95. Transactions designed to avoid tax liability

(1) Where the Commissioner-General has reasonable grounds to believe that the main purpose or one of the main purposes for which any transaction was effected (whether before or after the commencement of this Act) was the avoidance or reduction of liability to tax for any charge year, or that the main benefit which might have been expected to accrue from the transaction within the three years immediately following the completion thereof, was the avoidance or reduction of liability to tax, he may, if he determines it to be just and reasonable, direct that such adjustments shall be made as respects liability to tax as he considers appropriate to counteract the avoidance or reduction of liability to tax which would otherwise be effected by the transaction.

(2) Without prejudice to the generality of the powers conferred by sub-section (1), the powers conferred thereby extend to—

(a) the charging with tax the income of persons who, but for the adjustments, would not be chargeable with any tax or would not be chargeable to the same extent;

(b) the charging of a greater amount of tax than would be chargeable but for the adjustments.

(3) Any direction of the Commissioner-General under this section shall specify the transaction giving rise to the direction and adjustments as respects liability to tax which the Commissioner-General considers appropriate.

(4) For the purposes of determining liability to tax under subsection (1), the Commissioner-General may—

(a) re-characterise a transaction or an element of a transaction that was entered into as a tax avoidance scheme; and

(b) re-characterise a transaction the form of which does not reflect the substance.

[S 95 am by Act 26 of 1970, 16 of 1972,11 of 1973, 14 of 1976, 10 of 1979, 6 of 1980, 6 of 1981, 12 of 1982; s 95(4) ins by s 10 of Act 18 of 2013 w.e.f. 1 January 2014321.]

95A. …

[S 95A rep by Act 12 of 1982.]

95B. Inter-company shareholdings

(1) Where shares in any company are held by—

(a) another company or other companies, some or all of whose shares are held by the first-mentioned company; or

(b) a company which is not incorporated in the Republic, some or all of whose shares are held by—

(i) an individual who is resident in the Republic; or

(ii) a nominee on behalf of the individual mentioned in sub-paragraph (i) ;

whether by direct holding or through an interest in some other company or companies, the Commissioner-General may, by notice in writing to the companies concerned, direct that, for the purposes of this Act, the shares of all or any of such companies shall be deemed to be held in such manner as he shall determine (notwithstanding the actual shareholdings in such companies) and any distribution of dividends by those companies shall be deemed to have been received by the shareholders so determined in such companies in accordance with such determination.

“amount of a loan” means the amount of money advanced, the extent of credit facilities provided, the difference between the cost of providing any benefit or advantage and the amount paid for such benefit or advantage when provided or the difference between the open market value, as determined by the Commissioner-General, of an asset transferred and the amount paid for this at the date of transfer, as the case may be;

“grossed up equivalent of a loan” means such an amount as after deduction of tax at the highest rate specified in the Charging Schedule in respect for the income of an individual for the charge year in which the loan is made, is equal to the amount of the loan;

“loan” includes any advance of money, the provision of credit facilities, the provision of any benefit or advantage (whether or not such benefit or advantage is capable of being turned into money or money's worth) and the transfer of an asset.

(2) Subject to the other provisions of this section, where in any charge year a company makes, directly or indirectly, any loan to any person who at the time the loan is made is an effective shareholder of the company or a nominee of the effective shareholder, the company shall pay, without assessment, such an amount as is equal to the difference between the amount of the grossed up equivalent of the loan and the amount of the loan, as if the amount were tax charged on the company.

(3) Subject to the other provisions of this section, the amount which a company is liable to pay under this section shall be due and payable to the Commissioner-General within fourteen days after the end of the income tax month in which the loan is made and for the purposes of this section a loan shall be deemed to be made by when the loan would have been received, as provided by section 5, by the effective shareholder or the nominee, if the loan had been income of the effective shareholder or of the nominee;

(4) On making payment of any amount due under this section, the company shall furnish the Commissioner-General with a certificate stating, in relation to the loan in respect of which the amount is being paid—

(a) the name and address of the person to whom the loan has been made;

(b) the date the loan was made;

(c) the grossed up equivalent of the amount of the loan;

(d) the amount of the payment;

(e) the amount of the loan; and

(f) such other particulars as the Commissioner-General may, by notice in writing, require;

and shall send a copy of the certificate to the person to whom the loan was made.

(5) The Commissioner-General may, in his discretion, extend the time limited by sub-section (3) within which the amount payable under this section shall be paid.

(6) Where any part of the amount payable under this section is not paid within the time limited by sub-section (3), or as extended under sub-section (5), penalties shall be chargeable in accordance with sub-sections (1) and (2) of section 78 as if the amount payable were tax and the remaining sub-sections except sub-section (7) of that section shall apply to such penalties as if they were penalties charged in relation to tax.

(7) Where a company has paid any amount payable under this section in any charge year in respect of any loan made and the Commissioner-General determines that the loan or part thereof has been repaid by the person to whom the loan was made or, in the event of the death of such person by his executor or administrator, the amount paid relating to the loan or part thereof so repaid, shall at the end of the charge year in which the loan or part thereof was repaid, be deemed to be tax paid in excess to which the provisions of section 87 shall apply.

(8) Where any amount is payable under this section in any charge year in respect of any loan made, or where such an amount would have been payable but for the provisions of sub-section (12), and the loan or part thereof is released or written off, the grossed up equivalent of the amount so released or written off shall be deemed to be income of the person to whom the loan was made or, in the event of the death of such person before the date on which the loan or part thereof is released or written off, of his estate, received on the day on which the loan or part thereof is released or written off:

Provided that—

(i) where the loan relates to the provision of a benefit or advantage or to the transfer of an asset, that loan shall be deemed to have been released or written off on the last day of the accounts period of the company in which the loan was made to the extent that the loan is not included in the debtors as shown in the balance sheet of the company on that day;

(ii) where the person to whom a loan is made is not an individual, this sub-section shall not apply if at the time the loan is released or written off such person is not in existence.

(9) Where a company releases or writes off a loan or part thereof and sub-section (8) applies, the company shall, within thirty days after releasing or writing off such loan or part thereof, furnish the Commissioner-General with a certificate stating in relation to such loan or part thereof—

(a) the name and address of the person to whom the loan was made;

(b) the date the loan was made;

(c) the amount of the loan released or written off

(d) the date the amount of the loan was released or written off; and

(e) such other particulars as the Commissioner-General may, by notice in writing, require;

and shall send a copy of the certificate to the person to whom the loan was made.

(10) Where a company releases or writes off a loan or part thereof and sub-section (8) applies, the amount paid by the company under this section in respect of the loan or part thereof so released or written off, shall be applied firstly towards the satisfaction of any tax payable by the person deemed to have received income in respect of the loan or part thereof released or written off to the extent of such tax and the excess shall be deemed to be tax paid in excess by the company to which the provisions of section 87 shall apply.

(11) Where any amount paid by a company is applied towards the satisfaction of the tax payable by any person in accordance with sub-section (10), the company shall be entitled to recover the amount so applied from the person on whose behalf the amount was so applied or to retain out of any moneys that are or may come into his possession on behalf of that person so much as is necessary to indemnify him for the payment.

(12) This section shall not apply to a loan made to an effective shareholder or to his nominees where the joint total of all loans made to the effective shareholder and his nominees by all companies to which this section applies and of which the effective shareholder is an effective shareholder, does not exceed ten thousand kwacha:

Provided that where the said joint total exceeds ten thousand kwacha this section shall only apply to the excess.

(13) Where the Commissioner-General is of the opinion that a company is liable to pay an amount under this section but has failed to do so, he may forthwith make an assessment on such company specifying the particulars required in the certificate to be furnished by the company under sub-section (4) and the date such amount was due to be paid in accordance with sub-section (3) .

(14) Any amount assessed by the Commissioner-General in accordance with sub-section (13) shall be deemed to be tax due and payable on the date such amount was due to be paid as stated in the assessment and the provisions of Part VIII, relating to the collection, recovery and charging of penalties shall apply thereto:

Provided that where an assessment is made on a company under sub-section (12) by reason that while the joint total of the loans made by such company did not exceed twenty kwacha but the joint total of the loans made by such company and other companies did exceed that sum and the Commissioner-General determines that the company had taken all reasonable steps before making the loan to ascertain whether or not this section applied to the loan or part thereof, the amount payable shall be due and payable within thirty days of the date of service of the notice of assessment.

(15) The provisions of Part V, relating to the making of assessments, and the provisions of Part XI, relating to objections and appeals against assessments, shall apply to an assessment made under this section.

[S 95D am by Act 11 of 1975, 14 of 1976, 13 of 1994.]

96. Incurred loss not deductible in certain cases

(1) No deduction shall be made in respect of any loss arising from any business which, having regard to the nature of the business, to the principal occupation of the owner, partners, shareholders or other persons having a beneficial interest therein, to the relationship of the business to the domestic establishment of any such person or to any other relevant factor, the Commissioner-General considers it reasonable to regard as not being carried on mainly with a view to the realisation of profits; and, without prejudice to the generality of the foregoing, a business shall be deemed not to be carried on for any charge year with a view to the realisation of profits where more than one-quarter of the amount of the revenue expenditure incurred in such business in such year relates to goods, services, amenities or benefits, or to the production of goods, services, amenities or benefits, which are of a personal or domestic nature enjoyed by the owner, partners, shareholders or other persons having a beneficial interest in the business or a member of the family or the domestic establishment of any such person.

(2) Where the Commissioner-General is of the opinion that any change in the shareholding in any company, as a direct or indirect result of which income has been received by or has accrued to that company during any charge year, has been effected by any person solely or mainly for the purpose of utilising any loss incurred by the company in order to avoid liability on the part of that company or any other person for the payment of tax to reduce the amount thereof, any loss incurred in any charge year prior to the charge year in which the change in shareholding took place and not deducted from income and the loss incurred for the period from the commencement of the charge year in which the change of shareholding took place to the date of the change in shareholding shall not be deducted from any income received by the company after the date of the change in shareholding.

[S 96 am by Act 26 of 1970.]

97. Commissioner-General may avoid trust

(1) Where because of the existence of a trust the incidence of tax for any charge year in relation to a person beneficially interested in that trust is less than would be the case if that trust (apart from the ascertainment of the nature and amount of the beneficiary's interest for the purposes of this sub-section) did not exist, the Commissioner-General may determine that the income of the trust attributable to that beneficiary's interest for any charge year shall for the purposes of this Act be assessed as if it were his income, and it shall be assessed and charged accordingly.

(2) This section applies, with necessary modifications, to the administration of the estate of a deceased person as from a year after his death.

97A. Transfer pricing

(1) In this section—

“actual conditions” which are made or imposed between any two associated persons in their commercial or financial relations;

“arm’s length conditions” means subject to section 97AA where that section applies conditions or no conditions which would have been made or imposed if persons were not associated with each

(2) This section shall apply where a taxpayer engages in one or more commercial or financial transactions with an associated person and the actual conditions made or imposed in that transaction or transactions are different from the ann's length conditions and there is, except for this section, a reduction in amount of income taken intoaccount incomputing the income of one of the associated persons referred to in subsection (1), in this section referred to as ''the first taxpayer," chargeable to tax for a charge year, in this section referred to as "the income year".

(3) The income of the first taxpayer chargeable to tax in the in the income year shall be computed for tax purposes on the basis that the arm's length condition had been made or imposed, as between the first taxpayer and other associated person referred to in sub-section (2) instead of the actual conditions; and a computation on that basis is referred to as a computation on the arm's length basis.

(a) in the income year and by reason of the actual conditions, an amount of income received by that other person associated with the first taxpayer, in this section referred to as, the second taxpayer, is increased;

(b) that increase in income corresponds to the reduction in income of the first taxpayer referred to in sub-section (2); and

(c) a claim under this sub-section has been made in writing by the second taxpayer to the Commissioner-General;

the second taxpayer's income chargeable to tax in the income year shall be computed on the arms length basis for all tax purposes except for the purposes of section 46A.

(6) sub-section (4) shall not apply unless the amount of income mentioned in paragraph (a) of that sub-section would be taken into account in computing the amount of the second taxpayer's income chargeable to tax for the income year.

(7) For the purposes of sub-section (6) in case where no loss accrues or a smaller loss accrues, as mentioned in paragraph (a) of sub-section (4) and in sub-section (5), a profit shall instead be deemed to have accrued.

(8) Where an assessment or an amended assessment is made on the first taxpayer and the computation of income on which it is based takes into account a different amount of income from that on which earlier computations were based, the second taxpayer may amend a claim under sub-section (4) accordingly.

(10) A claim may not be amended under sub-section (8) by reason of an assessment or amended assessment unless the amended claim is made within one year of the date on which the assessment or amended assessment is made.

(11) Where a claim under sub-section (4) or an amended claim under sub-section (8) is allowed and the claimant has been or may be given credit by virtue of any agreement made under section 74 or under 76 for foreign tax, within the meaning of section 75 or 76, in computing the amount of that credit—

(a) the foreign tax to be taken into account as having been paid or as being payable by the claimant shall exclude any amount of foreign tax which would not have been paid or payable if the computation of the income on which the foreign tax is chargeable had, so far as it includes income to which the claim or amended claim relates, been made on the arm's length basis; and

(b) the amount of the income to be taken into account as having been received by the claimant and in respect of which the claimant is or may be given credit for foreign tax shall be determined, so far as it includes income to which the claim or amended claim relates, on the arm's length basis.

(12) any adjustment required to be made by virtue of this section shall be made by way of discharge or repayment of tax, by an amended assessment or otherwise and may be made notwithstanding that the adjustment relates to a charge year which ended more than six years earlier; and sub-sections (3), (4) and (5) of section 87 shall apply to an excess tax due to the taxpayer under this section as they apply to an excess determined under sub-section(1) of section 87.

(13) Notwithstanding any provision in this Act, for any transaction for the sale of base metals, precious metals or any substance containing base metals or precious metals, directly or indirectly, between related or associated parties, the applicable sale price of such metals or recoverable metals shall be the reference price.

(b) the monthly average Metal Bulletin cash price to the extent that the base metals or precious metal prices are not quoted on the London Metal Exchange;

(c) the monthly average cash price of any other metal exchange market as approved by the Commissioner-General to the extent that the base metal price or precious metal price is not quoted on the London Metal Exchange or Metal Bulletin; or

(d) the average monthly London Metal Exchange cash price, average monthly Metal Bulletin cash price or any other monthly average metal market exchange cash price approved by the Commissioner-General, less any discounts on account of poor or low quality or grade.

97AA. Special provisions where actual conditions include issuing security

(1) Where—

(a) actual conditions are imposed in terms of sub-section (1) of section 97A between two associated persons and those conditions include the issuing of a security; and

(b) the matters specified in sub-section (2) are relevant, in any way and to any extent, to the determination of the arm's length conditions for the purposes of section 97A; those conditions shall be determined, not only as if the issuing company and the other person, referred to in this section as “the first associate”, were not associated, but also as if there were no relationship, arrangement or connection, whether formal or informal, between the issuing company and any other person which is associated with the issuing company unless they are both members of the same Zambian grouping.

(2) The matters referred to in paragraph (b) of sub-section (1) are—

(a) the appropriate level or extent of the issuing company's overall indebtedness;

(b) whether it might be expected that the issuing company and a particular person would have become parties to a transaction involving the issue of a security by the issuing company or the making of a loan, or a loan of a particular amount, to that company; and

(c) the rate of interest and other terms that might be expected to be applicable in any particular case to such a transaction;

and the fact that it is not part of any company's business to make loans generally shall be disregarded for the purposes of this section.

(3) The membership of a Zambian grouping in relation to any issuing company shall be determined as follows:

(a) where the issuing company is not a subsidiary of a company resident in the Republic—

(i) if the issuing company has no subsidiaries, the only member of the Zambian grouping shall be the issuing company;

(ii) if it has one or more subsidiaries, the only members of the Zambian grouping shall be the issuing company and its subsidiaries; and

(b) where the issuing company is a subsidiary of a company resident in the Republic, in this section referred to as “the Zambian holding company”, the only members of the Zambian grouping shall be—-

(i) if there is more than one company resident in Zambia of which the issuing company is a subsidiary, such one them as is not itself a subsidiary of any of the others, and all its subsidiaries;

(ii) if sub paragraph (i) does not apply, the Zambian holding company and all its subsidiaries; but the first associate is not a member of the Zambian grouping in any case.

(4) For the purposes of this section referred to as “the subsidiary”, is a subsidiary of another company in this section referred to as “the parent” at any time if—

(i) the parent is beneficially entitled to more than fifty percent of any profits of the subsidiary available for distribution to equity holders of the subsidiary; and

(ii) the parent would be beneficially entitled to more than fifty percent of any assets of the subsidiary available for distribution to its equity holders on winding up; and for this purpose any profits or assets available for distribution to any equity holder otherwise than as an equity holder shall be disregarded;

(b) “the issuing company” means the company, which issued the security referred to in paragraph (a) of sub-section (1) ;

(c) “security” includes securities not creating or evidencing a charge on assets, and any—

(i) interest paid payable by a company on money advanced without the issue of a security for the advance; or

(ii) other consideration given by a company for the use of money so advanced;

shall be treated as if paid or payable or given in respect of a security issued for the advance by the company;

(d) “subsidiary” shall have the meaning assigned to it by paragraph (a) of this sub-section; and

(e) “Zambian grouping” refers to those companies that are members of a Zambian grouping within the meaning of sub-section (3);

(a) the percentage entitlement of a company means the percentage to which the company is or would be entitled either directly or through another body corporate or other bodies corporate or partly through another body corporate or other bodies corporate;

(b) the entitlement means, in the case of profits, the entitlement during the charge year, which is the income year in question within the meaning of sub-section (2) of section 97A and, in the case of assets, the entitlement at the end of that charge year;

(c) “equity holder” means a person who—

(i) holds ordinary shares in the company; or

(ii) is a loan creditor of the company in respect of a loan which is not a normal commercial loan; and

(d) “ordinary shares” means all the shares other than fixed-rate preference shares.

(6) A “ordinary shares” referred to in subparagraph (ii) of paragraph (c) of sub-section (5), in relation to a company, means a creditor in respect of any debt incurred by the company—

(a) for any money borrowed or capital assets acquired by the company; or

(b) in respect of any redeemable loan capital issued by the company:

Provided that a person carrying on the business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by that person in the ordinary course of that business.

(a) not carry any right either to conversion shares or securities of any description or to the acquisition of any additional shares or securities;

(b) do not carry any right to dividends other than dividends which—

(i) are of a fixed amount or at a fixed rate per centum of the nominal value of the shares; and

(ii) represent no more than reasonable commercial return on the consideration received by the company in respect of the shares; and

(c) on the repayment do not carry any rights to an amount exceeding that consideration.

(8) A “normal commercial loan” referred to in paragraph (c) of sub-section (5) is a loan—

(a) which does not carry any right either to conversion into shares or securities or the acquisition of any additional shares or securities;

[S 97AA(8)(a) subs by s 17(b)(i) and am by s 17(b)(ii) of Act 3 of 2002 w.e.f. 1 April 2002351.]

(b) which does not entitle the loan creditor to any amount by way of interest which depends to any extent on the results of the company's business or which exceeds a reasonable commercial return on the amount lent; and

(1) Section 97A(2) shall not apply in relation to the computations of income of any person who carries on a business in so far as that income is determined by reference to the accounts for that business for a period beginning before 1st April, 1999.

(2) Nothing in section 97A shall apply for the computation of any allowance which may, in accordance with sections 33, 34 or 34A of this Act, be deducted in ascertaining the profits or gains of a business or the emoluments of any employment or office.

(5) For the purposes of section 97A and 97B where conditions are made or imposed between associated persons in their commercial or financial relations—

(a) it shall be assumed, unless the contrary is shown to the satisfaction of the Commissioner-General, that different conditions or no conditions would have been imposed if those persons were not associated; and

(b) where a claim is made under subsection (4) of section 97A, it shall be for the claimant to prove that the claim satisfies that subsection.

(a) the direct and indirect participation in the management, control or capital of a person and different provision that may be made in relation to different cases or different classes of each case;

(b) the determination of whether the conditions of a controlled transaction under subsection (3) of section 97A are consistent with the arm's length conditions and the quantum of any adjustment made to the income of the first person or the second person in relation to subsections (3) and (4) of section 97A; and

(c) documentation rules in relation to section 97A that specify the information and documents required to be kept by a person in relation to section 97A and penalties for non-compliance of the Regulations.

(1) The Minister shall make regulations enabling a person, in such cases as may be prescribed in the regulations, to be joined as a party to an appeal to the Revenue Appeal Tribunal under section 109 or to make representations to the Commissioner-General on an objection against an assessment under section 108.

(2) Regulations under sub-section (1) shall apply only in cases where one of the grounds of the appeal or the objection relates to the question whether section 97A applies in relation to any computation relevant to the assessment or whether any computation has been made in accordance with that section.

Any person guilty of an offence against this Act shall, unless any other penalty is specifically provided therefor, be liable on conviction therefor to a fine not exceeding ten thousand penalty units or to imprisonment for a term not exceeding twelve months, or to both.

[S 98 am by Act 11 of 1992, 13 of 1994, 14 of 1994, 2 of 1995.]

99. Penalty for failure to comply with notice, etc.

Every person who—

(a) without just cause shown by him fails to furnish a full and true return in accordance with the requirements of any notice served upon him under this Act or of section 46 or 46A or fails to give notice to the Commissioner-General as required by section 45; or

(b) without just cause shown by him fails to furnish within the required time to the Commissioner-General or to any other person any document which under this Act or under any notice served on him under this Act he is required so to furnish; or

(c) fails to keep any records, books, accounts or documents that he is required to keep under this Act; or

(d) fails to produce any document for the examination or inspection of the Commissioner-General or other person in accordance with the requirements of this Act; or

(e) without just cause shown by him fails to attend at a time and place in accordance with the requirements of any notice served on him under this Act; or

(f) without just cause shown by him fails to answer any question lawfully put to him or to supply or furnish any information lawfully required from him under this Act; or

(g) otherwise contravenes or fails to comply with any of the provisions of this Act or of any regulations made thereunder, or fails to comply with any requirements of the Commissioner-General lawfully made under this Act or under any of the Schedules thereto; or

(h) obstructs or hinders any officer acting in the discharge of his duty under this Act;

shall be guilty of an offence against this Act.

100. Penalty for incorrect returns, etc.

(1) A person who negligently, fraudulently or through willful default—

(a) fails to furnish a return of income in accordance with the requirements of sub-section (2) of section46;

(b) fails to furnish a provisional return of income and tax in accordance with the requirements of section 46;

(c) makes an incorrect return by omitting or understating any income of which the person is required by this Act to make a return;

(d) gives any incorrect information in relation to any matter affecting the person’s own liability to tax or the liability

to tax of any other person; or

(e) submits any incorrect balance sheet, account, or other document;

shall pay a penalty equal to—

(i) in relation to a person liable to pay mineral royalty under the Mines and Minerals Development Act, 2008—

(A) in the case of negligence, one point five percent of the gross value or norm value;

(B) in the case of fraud, four point five percent of the gross value or norm value; and

(C) in the case of willful default, three percent of the gross value or norm value;

omitted or understated, in consequence of such failure, incorrect return, information or submission; and

(ii) in relation to a person liable to pay turnover tax—

(A) in the case of negligence, one point five percent of the amount;

(B) in the case of willful default, three percent of the amount; and

(C) in the case of fraud, four point five percent of the amount;

of any income omitted or understated, in consequence of such failure or incorrect return;

(3) The penalties provided by this section are a debt due to the Government and shall be treated as if they were tax for the purpose of recovery and shall be recoverable accordingly whether or not any proceedings are commenced for any offence against this Act arising out of the same facts.

(4) The Commissioner-General may accept a pecuniary settlement instead of taking proceedings for the recovery of a penalty under this section and may, in his discretion, mitigate or remit any penalty or stay or compound any proceedings for recovery thereof and may also after judgment in any proceedings under this Act further mitigate or entirely remit the penalty.

(5) Notwithstanding anything contained in Part XI, where in any appeal against an assessment which includes penalty, one of the grounds of appeal relates to the charge of such penalty then the decision of the Tax Appeal Court in relation to such ground of appeal shall be confined to the question as to whether or not the failure, claim, understatement or omission which gave rise to the penalty under sub-section (1) was due to any neglect, willful default or fraud.

[S 100 am by Act 11 of 1973, 14 of 1973, 10 of 1979, 11 of 1992, 4 of 1993.]

101. Time limit

No complaint charging any offence under section 98 or 99 shall be made at any time subsequent to six years after the date of the commission of the offence.

102. Penalty for fraudulent returns, etc.

(1) Any person who willfully with intent to evade or to assist another person to evade tax—

(a) omits from a return made under this Act any income which should under this Act be included therein; or

(b) makes any false statement or entry in any return under this Act; or

(c) gives any false answer, whether verbally or in writing, to any question or request for information asked or made in accordance with the provisions of this Act; or

(d) prepare or maintains or authorises the preparation of maintenance of any false books of account or other records, or falsifies or authorises the falsification of any books of account or records; or

(e) makes use of any fraud, art or contrivance whatsoever or authorises the use of any such fraud, art or contrivance; or

(f) makes any fraudulent claim for the refund of any tax;

shall be guilty of an offence and on conviction shall be liable to a fine not exceeding thirty thousand penalty units or to imprisonment for a term not exceeding three years, or to both.

(2) Whenever in any proceedings under this section it is proved that any false statement or entry is made in any return furnished under this Act by or on behalf of any person or partnership, or in any books of account or other records maintained by or on behalf of any person or partnership, that person or the partners shall be presumed, until the contrary is proved, to have made that false statement or entry with intent to evade tax.

(3) Any reference in this section to income or tax includes a reference to provisional income and provisional tax, respectively.

Where any offence under this Act has been committed by a body corporate, every person who, at the time of the commission of the offence was a director, general manager, secretary or other similar officer of such body corporate or who was acting or purporting to act in any such capacity, shall also be guilty of that offence, unless he proves that the offence was committed without his knowledge or consent, and that he exercised all such diligence to prevent the commission of the offence, as he ought to have exercised, having regard to the nature of his functions in such capacity and in all the circumstances.

104. Power to search and seize

If an officer authorised by the Commissioner-General to inquire into the affairs under this Act of any person satisfies a magistrate that in fact or according to reasonable suspicion that person has committed an offence under this Act, the magistrate may, by warrant, authorise the officer to exercise all or any of the following powers:

(a) between sunrise and sunset to enter any premises to search for money or documents or electronically stored data;

(1) In any civil or criminal proceedings under this Act any relevant document in the Commissioner-General's possession shall be received in evidence on mere production as such and shall be prima facie evidence of its contents, but the person affected by such production shall be given not less than four days' notice of intention to produce a document under this section, and he shall be given an opportunity to inspect and copy that document.

(2) Statements made or documents produced by or on behalf of any person shall not be inadmissible in any proceedings to which this section applies by reason only that it has been brought to his attention that—

(a) in relation to tax the Commissioner-General may accept pecuniary settlements instead of instituting proceedings; and

(b) though no undertaking can be given as to whether or not the Commissioner-General will accept such a settlement in the case of any particular person, it is the practice of the Commissioner-General to be influenced by the fact that a person has made a full confession of any fraud or default to which he has been a party and has given full facilities for investigation;

and that he was or may have been induced thereby to make the statements or produce the documents.

[S 105 am by Act 17 of 1971.]

PART XIOBJECTIONS AND APPEALS

106. Assessments good until disproved

Subject to the Commissioner-General's power relating to assessment, every assessment under this Act shall stand good unless proved otherwise by the person assessed upon objection or appeal under this Part.

107. Establishment of Tax Appeal Court, its composition and powers

(1) For the purposes of hearing and determining appeals as provided for in this Part, there is hereby established a Tax Appeal Court (hereinafter in this Part referred to as “the court”), consisting of a Chairman or Deputy Chairman or a Special Chairman, as the case may be, appointed by the Judicial Service Commission.

(2) The Chairman, Deputy Chairman and the Special Chairman shall be persons—

(a) who are entitled to practise as advocates in Zambia;

(b) who have held a judicial office; or

(c) who, in the opinion of the Judicial Service Commission, have sufficient knowledge of and experience in tax matters so as to be qualified for appointment to the offices of the Chairman, Deputy Chairman and the Special Chairman.

(3) The court shall be presided over by the Chairman, and in his absence by the Deputy Chairman, and in the absence of the Chairman and Deputy Chairman by the Special Chairman. The Deputy Chairman or the Special Chairman shall do all things which the Chairman is empowered to do under this Act, and shall, while presiding over the court, have all the powers of the Chairman.

(4) A person shall not sit or act as a Chairman of the court if he has any interest, direct or indirect, personal or pecuniary, in any matter before the court.

(5) The court shall sit in such places as may be appointed by the Chairman.

(6) The date of hearing of any appeal shall be determined by the Chairman and notice thereof shall be published by him in the Gazette at least one month prior to that date.

(7) There shall be paid to the Chairman of the court such remuneration and allowances as the Attorney-General may (with the approval of the Minister) determine.

(8) The Public Service Commission may appoint a Registrar and such other officers of the court as it may deem necessary.

(9) If any person without reasonable excuse fails to attend as a witness or give evidence or to produce any document in his possession or power which relates to any matter in question on appeal when so required by the court he may be fined summarily by the Chairman an amount not exceeding two hundred penalty units and ordered to serve a sentence not exceeding three months' imprisonment in default of payment of the fine.

(10) The Minister may, by statutory instrument, make regulations with respect to the administration, organisation, powers, practice and procedure of the court in relation to appeals, costs on appeals and matters connected with the foregoing.

[S 107 am by Act 14 of 1973, 11 of 1975, 11 of 1992, 13 of 1994.]

108. Objection to assessment

Within thirty days of the date of service of notice of assessment, the person assessed may make to the Commissioner-General a written statement of objection to the assessment setting out the grounds of objection, and the Commissioner-General shall give that person written notice of his decision concerning that objection:

Provided that—

(i) the Commissioner-General may determine that an objection may be made within a longer period than thirty days but where he does not so determine he shall give the person written notice of his determination and the person may appeal against the determination under section 109 without making an objection;

(ii) the right of objection to an amended assessment which is not made as a result of an objection shall be restricted to the items in that assessment which differ from, or are additional to, the items in the assessment for the same charge year made immediately prior to that assessment and only to the extent of such difference or addition;

(iii) the right of objection to an amended assessment which is made as a result of an objection shall be the same right of objection as existed to the assessment objected to; and

(iv) an amended assessment issued as a result of an objection shall, unless objected to, be the Commissioner-General's written decision concerning the objection.

[S 108 am by Act 11 of 1975.]

109. Appeal against assessment

(1) If a person assessed is dissatisfied with the Commissioner-General's decision concerning his objection to the assessment, that person may, by written notice to the Chairperson, within thirty days of the date of service of the written notice of the Commissioner-General's decision, appeal against the assessment to the tribunal and shall send a copy of the notice to the Commissioner-General.

(2) The High Court shall hear and determine any such appeal and may confirm, reduce, increase or annul the assessment determined by the court and make such further or other order on such appeal, whether as to costs or otherwise, as to the High Court may seem fit.

(3) An appeal from a decision of the High Court under this section shall lie to the Supreme Court as it lies in the case of and as though it were a judgment of the High Court made in the exercise of its original civil jurisdiction.

[S 111 am by Act 14 of 1973, 11 of 1974.]

112. Privacy of proceedings

(1) Where a person assessed so requests, all proceedings concerning him under this Part shall be in private, or in camera, as the case may be.

(2) Nothing in sub-section (1) shall prevent the printing or publishing of the judgment or order made on the determination of an objection or appeal if the High Court or Supreme Court does not prohibit publication, but any such publication shall not disclose the identity of the taxpayer concerned.

[S 112 am by Act 14 of 1973, 11 of 1974.]

113. Adjustment on successful objection or appeal

On the final determination of an objection or appeal against an assessment the Commissioner-General shall make all assessments and adjustments as are necessary to give effect to the determination and the provisions of section 87 shall apply to any tax paid in excess as a result of such determination.

(1) Where it is provided by this Act that any matter is subject or according to—

(a) the Commissioner-General's discretion, such discretion shall not be questioned in any proceedings;

(b) the Commissioner-General's determination, such determination shall only be questioned in any proceedings on the ground that it is unreasonable.

(2) If a person is dissatisfied with a determination of the Commissioner-General, that person may object to or appeal against that determination as if the determination were an assessment and the provisions of this Part relating to objections and appeals against assessments shall apply mutatis mutandis.

(3) Where the Commissioner-General's determination as provided for in this Act is in relation to any assessment, any appeal against that determination shall be heard as a preliminary point upon an appeal against that assessment, and in any other case such appeal shall be heard as if the determination were an assessment.

(1) Income includes, in the case of any person to whom, under any agreement relating to or derived from the grant to any other person of the use or occupation of land or buildings, there accrues the right to have improvements effected on the land or to the buildings by any other person—

(a) the amount stipulated in the agreement as the value of, or the amount to be spent on, the improvements; or

(b) if no amount is stipulated, an amount representing the value of the improvements;

and in either case the amount is deemed for the purposes of this Act to have been received by the first-mentioned person in equal monthly installments from the date the improvements were effected over the unexpired period of the agreement or over twenty-five years, whichever period is the less.

(2) All the installments deemed under sub-paragraph (1) to have been received by a person that have not been included in his income before any of the following events are treated as having been received by him immediately before the happening of any such event:

(a) the cancellation of the agreement;

(b) the sale or other disposal of the land or buildings as improved; or

(c) his death or bankruptcy, or, in the case of a company, its liquidation.

3. Commencement and cessation of employment

Income includes any amount received in connection with the taking up of employment or by reason of the cessation of any agreement for employment including compensation for loss of office or employment.

4. Lump sum payments

Income includes lump sum payments.

5. Capital recoveries

(1) Income of a person includes any amount paid by which recoveries from capital expenditure exceed—

(a) in the case of a building, such residue of the expenditure ranking for capital allowances incurred in respect of the building on which capital recovery has been made as remains after the deduction of any initial, wear and tear or other capital allowance or similar deduction whether allowed under this Act or under any provisions of the previous law for any charge year in respect of the building; but in no case shall the amount to be included in the income exceed the total of the deductions so allowed to him in respect of the building;

(b) in case of implements, machinery or plant, such residue of the expenditure ranking for capital allowances incurred in respect of the implements, machinery or plant on which capital recovery has been made as remains after deduction of any wear and tear or other capital allowances or similar deduction whether allowed under this Act or under any provisions of the previous law for any charge year; but in no case shall the amount to be included in the income exceed the total of the deductions so allowed to that person in respect of those implements, machinery or plant.

(a) a recovery from capital expenditure shall be deemed to have taken place when—

(i) a building ceases to belong to such person without being sold, or permanently ceases to be used by such person for the purposes of any business;

(ii) any implement, machinery or plant ceases to belong to such person without being sold, or permanently ceases to be used by such person for the purposes of his business.

(b) the amount of the recovery from capital expenditure shall be the amount which, according to the Commissioner-General's determination, the asset would have realised in the open market at the time the event giving rise to the recovery occurred.

(3) For the purposes of this paragraph the expression “capital allowances” shall not include any investment allowance deducted pursuant to section 34, or pursuant to paragraph (w) of sub-section (2) of section 13 of the former Act.

Where land is disposed of for valuable consideration, and there is on that land exotic timber which has been grown for sale, the market value of that timber at the time the land is disposed of is included in income.

7. Farm stock

Any stock owned by a farmer at the beginning and end of each period for which he makes up the accounts of his farming business shall, in computing the gains or profits from such business be taken into account:

Provided that where livestock bought by a farmer for stud has been included in stock at the end of a period for which accounts are made up such livestock shall be included in stock at the beginning of the next period for which accounts are made up. For the purposes of this paragraph “stock” includes all livestock produce, and crops which have been harvested.

Income includes the difference between the market value of the shares at the date of exercise of the share options and the option price or the gross sale proceeds or proceeds from sale of options in respect of shares allotted, reserved, vested or acquired by an individual in terms of a share option scheme net of any amount paid for the acquisition or exercise of the shares or options by the individual concerned, and shares or options sold shall be deemed to be the shares or options longest held, except that the relief afforded by subsection (5) of section 21 shall extend to such income to the extent not absorbed by compensation received for loss of office or employment where the gross sale proceeds are receivable within one year of termination of services.

Amounts refunded to any person carrying on mining operations pursuant to paragraph (a) of sub-section 3 of section 122 of the Mines and Minerals Development Act, shall be deemed to be income in the year that the refund is made.

The income of the Litunga of the Western Province as Litunga and the income of any Chief received as a Chief from the Government, are exempt from tax.

PART IIFOREIGN EXEMPTIONS

3. There shall be exempt from tax

(a) the emoluments of any individual payable in respect of any office which he holds in the Republic as an official of any foreign government, if such individual is resident in the Republic solely for the purpose of carrying out the duties of his said office;

(b) the emoluments of any domestic or private servant of any individual referred to in sub-paragraph (a) payable in respect of domestic or private services rendered or to be rendered by such servant to such individual, if such servant is not a Zambian citizen and is resident in the Republic solely for the purpose of rendering the said services;

(c) the emoluments payable to any individual who is not a Zambian citizen and who is temporarily employed in the Republic in connection with any technical assistance scheme provided by any foreign country, any international organisation, or agency, any foreign foundation or any foreign organisation, if the exemption of such emoluments or such part of the emoluments as may be specified is authorised under the terms of an agreement entered into by the government of such foreign country, international organisation or agency, foreign foundation or foreign organisation with the Government of the Republic;

(d) the emoluments of any individual in respect of service with any international organisation or any agency of a foreign government or any foreign foundation or organisation, which organisation, agency or foundation is approved by the Minister by order in the Gazette and such individual is not a Zambian citizen and is resident in the Republic solely for the purpose of rendering the said service or secondment to any Zambia organisation, agency, or foundation.

(d) agricultural society, mining or commercial society, whether corporate or unincorporate, or any other society having similar objects, not operating for the private pecuniary gain or profits of its member;

(e) club, society or association organised and operated only for social welfare, civil improvement, pleasure, recreation or like purposes, if its income, whether current or accumulated, may not in any way be received by an member or shareholder;

(3) The income of a co-operative society registered under the Co-operative Societies Act shall be exempt from tax if the gross income, before deduction of any expenditure, of such co-operative society when divided by the number of its members (that is to say, the number of individuals who are members together with, where another co-operative society so registered is a member, the number of individuals who are members of that other co-operative society) on the last day of any accounting period of twelve months does not exceed the amount taxable at the rate of zero per centum per annum as set out in clause (c) of subparagraph (1) of paragraph 2 of the Charging Schedule, or, if such accounting period is more or less than twelve months, such figure as bears the same relation to the amount taxable at the rate of zero per centum per annum as set out in clause (c) of subparagraph (1) of paragraph 2 of the Charging Schedule, as the number of months in such accounting period bears to twelve.

(4) The income of a non-resident person derived from the carrying on of the business of ship owner, charterer or air transport operator shall be exempt from tax where the country in which such non-resident person is resident extends a similar exemption to ship owners, charterers and air transport operators who are not resident in such country but who are resident in the Republic.

(5) The income of any organisation, partnership or body corporate, or such part of the income as is specified, shall be exempt from tax where the objects and activities within the Republic of such organisation, partnership or body corporate are to assist in the development of the Republic and such exemption of the income, or such part thereof as is specified is approved by the Minister by Statutory Order.

(1) There shall be exempt from tax the income of any public benefit organisation or of any body of persons or trust established for the promotion of religion or education, or for the relief of poverty or other distress, if, in relation to the people of the Republic, the income may not be expended for any other purpose.

(2) If the income referred to I subparagraph (1) is the profit of a business carried on by a public benefit organisation, body or persons or trust receiving it, that income is not exempt from tax and shall be taxed at the rate specified in the Charging Schedule.

6A. Interest on treasury bills, etc received by public benefit organisation, body person or trust subject to withholding tax

(1) Notwithstanding the provisions of subparagraph (1) of paragraph 5 and subparagraph (1) of paragraph 6, or any other provisions of this Act, or any other provision of this Act, any interest on treasury bills, government bonds, corporate bonds or any financial instrument or securities received by any public benefit organisation, body, person or trust referred to in those subparagraphs, shall be subject to withholding tax under section 82A.

(2) In this paragraph “securities” has the meaning assigned to it by section 2 of the Securities Act.

(a) by way of lump sum payments withdrawn from an approved fund at retirement age or death or on the beneficiary becoming permanently incapable of engaging in an occupation or such sums withdrawn from an approved fund which the Commissioner-General determines cannot be enjoyed by the member until he attains retirement age;

(b) as a war disability pension, or as a war widow's pension, or as an old age pension paid out of public funds, or as a benefit paid under any written law in respect of injury or disease suffered in employment;

(c) in conjunction with the award of military, police, and fire brigade decorations for distinguished or good conduct or long service;

(d) by an individual or his dependents or heirs, being on account of his injury or sickness, from any approved fund or registered trade union or medical aid society or under any policy of insurance;

(e) as a local overseas allowance by any member of the Defence Force of the Republic while on service officially declared to be active service;

(f) as an allowance paid for service outside the Republic by the Government or a statutory corporation in respect of an excess of living expenses due to such service;

(g) in respect of a scholarship or bursary, for the purposes of education and maintenance during such education;

(h) by way of alimony, maintenance or allowance under any judicial order or decree in connection with matrimonial proceedings, or under any separation agreement, to the extent of the amount of the alimony, maintenance or allowance that has not been allowed as a deduction to another individual under this Act;

[Editorial Note: After its deletion by Act 4 of 1993, clause (m) was further amended by Section 30(c) of Act 7 of 1996 which stipulated deletion of its priviso. Since main clause had already been deleted, this later amendment has not been incorporated.]

“child” means a child of an individual who at the commencement of the charge year in which a passage is made is under nineteen years of age and is, at the time the passage is made, unmarried and wholly dependent on such individual;

“commencement passage” means the first passage under the terms of the written contract granting such passage to the Republic from the home country of an individual;

“home country” means the country in which an individual is resident for the purposes of income tax or the equivalent tax, immediately before coming to the Republic, or the country of which the individual is a citizen;

“leave passage” means a return passage taken for leave purposes between the Republic and the home country of an individual or in the case of an individual;

“passage” means a journey by air by the cheapest available fare as an economy class passenger on a scheduled airline the cost of which is granted to an individual under the terms of a written contract for his employment in the Republic;

“terminal leave” means leave due to an individual under the terms of a written contract for his employment in the Republic, taken after the last day of service of the individual in the Republic under such contract;

“terminal passage” means the last passage under the terms of the written contract granting the passage from the Republic to the home country of an individual;

(2) This paragraph shall not apply to the value of a passage made—

(a) by an individual, his wife or child referred to in sub-paragraph (1) of paragraph 7, subject, however, to the provisions of sub-paragraph (3) ;

(b) by an individual or by the spouse or child of such individual where the individual is an effective shareholder or a director, other than a whole-time service director, of the company granting the passage;

(c) by the spouse or child of an individual who alone or in partnership as employer grants the passage;

(d) by an employee of a company granting a passage or the spouse or child of such employee, where the employee or his spouse is carrying on a business alone or in partnership and the services of the employee are provided to such business by such company; or

(e) by the wife or child of an individual where the passage is granted under the terms of a written contract for the employment of the wife in the Republic if at the time such passage is made the wife is living with the individual and sub-paragraph (9) does not apply.

(3) The right of an individual to exemption from tax in respect of the value of a passage under this paragraph shall be available under the terms of only one written contract for employment in any one period of employment in the Republic.

(4) Subject to the other provisions of this paragraph, the value of a commencement and a terminal passage made by an individual shall be exempt from tax.

(5) Subject to the other provisions of this paragraph, the value of a commencement and a terminal passage made by the wife or child of an individual shall be exempt from tax:

Provided that—

(i) the written contract which grants the cost of the passage specifies that the individual is to be employed in the Republic for a period of not less than one year, excluding terminal leave;

(ii) the individual is so employed under the contract for the specified period or for a lesser period, where the Commissioner-General determines that the individual was prevented from being so employed for the specified period due to circumstances beyond the control of such individual; and

(iii) for each contract the value of not more than one commencement and one terminal passage in respect of a wife shall be exempt from tax.

(6) Subject to the provisions of this paragraph, the value of a leave passage made by an individual, his wife or his child, shall be exempt from tax:

Provided that—

(i) the written contract which grants the cost of the passage specifies that the individual is to be employed in the Republic for a period of not less than three years, excluding terminal leave;

(ii) the individual is so employed under the contract for the specified period;

(iii) the passage is made during the period of which the individual is so employed under the contract;

(iv) Subject to proviso (v), for each contract the value of not more than one such leave passage shall be exempt from tax;

(v) for each contract the value of one further such leave passage shall be exempt from tax for each period of not less than two years, excluding terminal leave, for which the individual is so employed, in addition to the first three years; and

(vi) where the Commissioner-General determines that the individual was prevented from being so employed under the contract for the specified period due to circumstances beyond the control of the individual the value of the passage shall be exempt from tax.

(8) Where a passage is made the value of which would be exempt from tax under this paragraph if it were made by air or from, or to, a place provided by this paragraph but is not so made, the value of such passage shall, subject to a limit of the value of a passage which would be exempt from tax if made by air and from, or to, a place so provided, be exempt from tax.

(9) Where an individual is permanently incapable of engaging in an occupation and his wife is employed in the Republic then, the wife shall, for the purposes of this paragraph, be deemed to be the individual and the individual the wife.

(1) An annuity shall be exempt from tax where such annuity is bought by an annuitant out of a lump sum payment withdrawn from an approved fund at retirement age, or death, or on the beneficiary being permanently incapable of engaging in an occupation and which is exempt from tax under paragraph 7(a).

(2) An annuity, other than an annuity payable out of an approved fund, shall be exempt from tax to the extent that it represents a return of the purchase price.

11. Annuities

This Second Schedule shall not apply to income comprising fees paid or payable in respect of the management of a pension fund of any class or description, including any approved fund, and such fees are not exempt from tax by virtue of this Schedule.

(d) deducting the actual losses (less the amounts received under reinsurance), and other expenses, including deductions under Part II of the Fifth Schedule, allowable as a deduction in calculating business profits.

(2) The profits of carrying on insurance business, other than life insurance business, by a company that is not resident are ascertained for a financial year of the company by—

(a) taking the gross premiums, interest, and other income, received in the Republic, less premiums refunded or paid on reinsurance; and

(b) adding any reserves for unearned premiums and outstanding claims made at the beginning of the financial year;

(c) deducting any such reserves made at the end of the financial year; and

(d) deducting the actual losses (less the amounts received under reinsurance), agency expenses and deductions allowed under Part II of the Fifth Schedule incurred in the Republic, and such proportion of the company's head office expenses as the Commissioner-General determines.

(3) For the purpose of this paragraph—

(a) a “reserve for unearned premiums” means a reserve calculated by reference to the net premium income:

Provided that a reserve for unearned premiums or for outstanding claims does not include an equalisation reserve, that is to say, an amount set aside out of past or current underwriting profits to meet future underwriting losses;

(b) the amount which may be deducted as a reserve for unearned premiums is the amount which would constitute that reserve if its amount were computed on the one twenty-fourth or more accurate basis where the one twenty-fourth figure is computed on the basis that contracts coming into force in a given month commence in the middle of that month and spread evenly in half monthly periods; and

(c) the amount which may be deducted as a reserve for outstanding claims shall not exceed such amount as is reasonable having regard to relevant historical or actuarial data and other factors, and shall not in any event exceed the amount of the reserve actually made.

(1) The profits from the life insurance business of a resident insurance company for a financial year shall be the excess of the total investment income from that business for that year over the aggregate of—

(a) the amount disbursed during the year as expenses of management wholly and exclusively attributable to that business; and

(b) any amount allowable under Part II of the Fifth Scedule as a deduction in calculating business profits.

(2) The profits from the life insurance business of a non-resident insurance company for a financial year shall be—

P={A/B}x (I-E)

Where—

P is the profits to be found;

A is the mean actuarial liabilities of the company for the year in question in respect of local life policies;

B is the mean of the company's total actuarial liabilities for the year in question;

I is the total investment income of the company for that year; and

E is the aggregate of—

(a) the amount disbursed by the company during that year as expenses of management wholly and exclusively attributable to the life insurance business of the company carried on in Zambia (including such proportion of the company's head office expenses as the Commissioner-General may determine); and

(b) any amount allowable under Part II of the Fifth Schedule as a deduction in calculating business profits.

(2a) Any expenses of management which are not set against a life insurance company's investment income for a financial year in accordance with sub-paragraph (1) or (2) due to an insufficiency of investment income shall, for the purposes of this Act, be treated as losses accruing to the company for that year.

“local life policy” has the meaning assigned to “life policy” by section 2 of the Insurance Act,1997, and is a policy issued in accordance with section 78 of that Act, in Zambia, by a licensed insurer but does not include a policy which constitutes part of an approved fund (as defined in this Act) and an annuity policy under which an annuity is being paid.

“actuarial liabilities” means the actuarial liabilities determined on the basis used by the company for making returns of actuarial liabilities in terms of the insurance legislation of the Republic;

“mean actuarial liabilities” means one-half of the sum of the actuarial liabilities calculated at the beginning and end of the company's financial year for which the Commissioner-General has, in respect of the charge year concerned, accepted the accounts of the company under sub-section (1) of section 62.

[Third Sch para 2(3) am by Act 20 of 1970.]

3. Insurance and other business

The tax on the profits of a company that carries on life insurance business in conjunction with any other insurance business is charged in one sum, but the profits of the life insurance business are separately calculated.

4. Mutual and proprietary companies

This Schedule applies as well to a mutual insurance company as to a proprietary insurance company.

FOURTH SCHEDULE

[Section 37]

APPROVED FUNDS

1. Definition of “trustees”

In this Schedule, “trustees” means the persons, by whatever name called, having the management or control of a fund which either is or was an approved fund within the meaning of approved fund as defined in this Act, or which is a fund or scheme in relation to which an application is made under paragraph 2 for the approval of the Commissioner-General.

2. Approval of pension funds

(1) Where any fund or scheme is established by or on behalf of an employer for the payment, under the rules relating thereto, of pensions and other benefits to his employees in respect of service with him on the retirement of his employees from such service or to dependents of his employees on the death of his employees, then application under paragraph 2 may be made for such fund or scheme to be approved by the Commissioner-General; and, where any fund or scheme is so approved, it shall be known as an approved pension fund.

(2) The Commissioner-General shall not approve any fund or scheme unless he considers that the rules relating thereto have as their main object the provision of pensions to employees on their retirement from the service of the employer on or after attaining a specified age and unless the Commissioner-General is satisfied—

(a) that the fund or scheme is established in the Republic in connection with any business carried on wholly or partly within the Republic by the employer; and

(b) that the rules do not—

(i) provide for the payment to any employee during the employee's life of any sum except a pension which may, subject to this paragraph, be commuted or, in the event of the employee leaving the service of the employee's employer in circumstances in which no pension is payable to the employee, any contributions to—

(a) a defined contributory fund or scheme made by the employee and the employee's employer together with reasonable interest; or

(b) a defined benefit fund or scheme made by the employee and the employee's employer together with reasonable interests;

(ii) provide for the payment of the pension otherwise than on the retirement of the employee from the service of his employer on or after attaining the age of 55 years or on earlier retirement on account of any infirmity of mind or body;

(iii) provide for the payment of any other sums on the death of the employee except a lump sum, or sums payable by way of annuity to the widow or widower or dependents of the employee;

(iv) provide for the payment of the pension otherwise than during the life of the employee or for the payment to the widow or widower of the employee of an annuity otherwise than for a term certain or during the life of the widow or widower or during the minority of any dependent of the employee;

(v) provide for the annuity, if any, payable to the widow or widower of the employee to be of a greater annual amount than the pension payable to the employee; and

(c) that the rules do—

(i) provide that all annual contributions of a recurrent nature to the fund or the scheme shall be in accordance with specified scales and clearly specify the benefits payable to members and their dependents from the fund or under the scheme;

(ii) provide that membership of the fund or scheme shall be open to all employees of the group or class of groups or classes specified in the rules;

(iii) provide that no pension, annuity or other sum payable out of the fund or under the scheme shall be capable of surrender or assignment except as provided for in sub-paragraph (2)(c)(vii) ;

(iv) provide that no contribution made to the fund or scheme by the employer shall be returnable to him;

(v) provide, in any case where the employer is a company the directors whereof have a controlling interest therein, that no director or the widow or widower or any dependent of a director, of the company shall be entitled to any payment out of the fund or under the scheme in respect of his service while he is such a director and that no contributions shall be made to the fund or scheme in respect of the service of such a director; and for the purposes of this sub-paragraph director does not include a whole time service director;

(vi) provide that, if the fund or scheme is wound up, the assets thereof shall be applied in the purchase of annuities for its members or, if a member so elects, shall be transferred to another approved fund;

(vii) provide that, where any pensions payable out of the fund or under the scheme to an employee may be commuted, the amount of the pension that may be commuted shall not exceed five thousand kwacha or one-half of the pension, whichever may be the greater.

(3) The Commissioner-General may, in his discretion and subject to any conditions he thinks proper to impose—

(a) approve a fund or scheme the rules relating to which otherwise satisfy sub-paragraph (2), notwithstanding that the fund or scheme—

(i) is established outside the Republic in connection with any business carried on wholly or partly within the Republic by the employer;

(ii) is established in connection with a function exercised in the Republic by the employer which is not a business;

(iii) provides for a pension to be paid to an employee before he attains the age of 55 years, but not before he attains the age of 45 years, if the Commissioner-General is satisfied that the nature of the service of the employee is one in which persons customarily retire before attaining the age of 55 years;

(iv) provides, in the event of the death of an employee after he has commenced to draw a pension from the fund or under the scheme, for the payment of such a sum as together with the total amount paid to him by way of pension does not exceed the contributions made to the scheme in respect of him together with reasonable interest thereon;

(v) provides for the employer to recover out of the amount standing to the credit of any employee any sum due by the employee under this Act and paid on his behalf and on his authority by the employer;

(b) approve a fund or scheme notwithstanding that the rules relating thereto do not satisfy the other provisions of this paragraph if, in his opinion, such rules satisfy substantially those provisions;

(c) approve part of a fund or scheme where the rules relating to that part satisfy substantially the other provisions of this paragraph; and in any such case the part so approved shall be the approved pension fund.

3. Procedural provisions relating to approval of fund and withdrawal of approval

(1) Where application is made for approval of any fund or scheme under paragraph 2, then the trustees of the fund or scheme shall make the application in writing to the Commissioner-General; and the application shall be accompanied by two copies of any instrument under which the fund or scheme is established and of the rules relating to the fund or scheme.

(2) After consideration of any application referred to in sub-paragraph (1), the Commissioner-General shall inform the trustees of the fund or scheme in writing of his decision and, if the decision is an approval of the fund or scheme, of the charge year in relation to which it is approved, whether the fund or scheme is approved in whole or in part and of any conditions to which the approval is subject; and, where any fund or scheme or part thereof has been approved by the Commissioner-General for any charge year, the fund or scheme or part thereof shall, subject to sub-paragraph (3), be deemed to be approved for each subsequent charge year unless the Commissioner-General withdraws approval under sub-paragraph (4) .

(3) Where there is any alteration to the instrument establishing any approved pension fund or to any rules relating to any such fund, then the trustees of the fund in question shall immediately inform the Commissioner-General in writing of the alteration; and, if the Commissioner-General is not so informed, the approval of the fund in question shall be deemed to have been withdrawn as from the date of the alteration.

(4) The Commissioner-General may at any time by notice in writing withdraw his approval of any approved pension fund, if in his opinion—

(a) the conditions on which the approval of the fund in question was granted have not been complied with; or

(b) there has been any alteration to the instrument establishing the fund in question or to any rules relating to it.

(5) Where any approved pension fund ceases to be an approved fund, the provisions of section 82 shall nevertheless continue to apply in respect of the return of any contributions made while it was an approved fund.

(6) The accounts of an approved pension fund shall be maintained in such form and for such periods as the Commissioner-General may determine.

(7) References in sub-paragraphs (3) to (6), both inclusive, to approved pension fund shall be read and construed as including references to a pension fund within the meaning of paragraph (d) of the definition of approved fund; and fund shall be construed accordingly.

4. Approval of annuity contracts and withdrawal of approval

(1) Where an individual in any charge year pays a premium under a contract providing for the payment to him of a life annuity (hereinafter referred to as an annuity contract) then he may apply for the contract to be approved by the Commissioner-General.

(2) Subject to sub-paragraph (3), the Commissioner-General shall not approve an annuity contract unless he considers that the main object of such contract is the provision for the individual applying for its approval, of a life annuity in old age and unless the Commissioner-General is satisfied—

(a) that the annuity contract is made in the Republic with an Insurance Company or body of Persons lawfully carrying on in the Republic the business of granting annuities on human life;

(b) that the annuity contract provides for annual contributions by the individual throughout the currency of the contract; and

(c) that the annuity contract does not—

(i) provide for the payment during the life of the individual of any sum except sums payable to the individual by way of annuity, which may, subject to this paragraph, be commuted; or

(ii) provide for the annuity payable to the individual to commence before he attains the age of 55 years or after he attains the age of 65 years; or

(iii) provide for the payment of any other sums except sums payable by way of annuity to the individual's widow or widower and any sums which, in the event of no annuity becoming payable to the individual, are payable to the executors or administrators of the individual by way of return of premiums, by way of reasonable interest on premiums or by way of bonuses out of profits;

(iv) provide for the annuity if any, payable to the individual's widow or widower to be of a greater annual amount than that paid or payable to the individual; or

(v) provide for the payment of an annuity otherwise than for the life of the annuitant;

(d) that the annuity contract does—

(i) provide that no annuity payable under it shall be capable in whole or in part of surrender or assignment except as provided for in subparagraph (2) (d) (ii) ;

(ii) provide that not more than one-third of any annuity payable under it to the individual may be commuted;

(iii) provide that no annuity payable under it to the individual's widow or widower may be commuted:

Provided that, save under such conditions as the Commissioner-General thinks proper to impose, no annuity contract shall be approved by the Commissioner-General if the individual is contributing to any approved pension fund or an approved fund within the meaning or paragraph (c) of the definition of approved fund.

(3) The Commissioner-General may, in his discretion and subject to any conditions he thinks proper to impose, approve an annuity contract otherwise satisfying sub-paragraph (2) notwithstanding that such annuity contract was made by an individual resident in the Republic in a country other than the Republic with an insurance company or body of persons lawfully carrying on the business of granting annuities on human life before he became resident or that the annuity contract provides—

(a) for the payment after the death of the individual applying for such approval of an annuity to a dependant not the widow or widower of the individual;

(b) for the payment to the individual of an annuity commencing before he attains the age of 55 years, if the annuity is payable on his becoming incapable through infirmity of mind or body of carrying on his own occupation or any occupation of a similar nature for which he is trained or fitted;

(c) if the individual's occupation is one in which persons customarily retire before attaining the age of 55 years, for the annuity to commence before he attains that age (but not before he attains the age of 50 years) ;

(d) for the annuity payable to any individual to continue for a term certain (not exceeding 10 years) notwithstanding his death within that term or for the annuity payable to any individual to terminate or be suspended on marriage (or re-marriage) or in other circumstances;

(e) in the case of an annuity which is to continue for a term certain, for the annuity to be assignable by will and, in the event of any individual dying entitled to it, for it to be assignable by executors or administrators in the distribution of the estate so as to give effect to a testamentary disposition, or to the rights of those entitled on intestacy, or to an appropriation of it to a legacy or to a share or interest in the estate.

(4) The Commissioner-General may at any time, by notice in writing given to the persons by and to whom premiums are payable under any approved annuity contract, withdraw that approval on such grounds and from such date as may be specified in the notice.

5. Approval of foreign fund or scheme established by law

(1) On receiving a claim for approval, the Commissioner-General may, in his discretion, and subject to any conditions he thinks proper to impose, approve a fund or scheme established by law in any other country, the main object of which is to provide for the payment under the rules relating thereto of pensions to its members on retirement from employment and, where any such fund or scheme is so approved, it shall be known as an approved pension fund.

(2) The Commissioner-General may at any time withdraw approval of a fund approved under this paragraph.

[Fourth Sch para 5 am by Act 26 of 1970.]

6. Appeals

Where under this Schedule the Commissioner-General may approve any pension fund or annuity contract (but not where he may approve thereof subject to any conditions) or may withdraw approval from any approved fund, then any person aggrieved by the refusal of the Commissioner-General to grant his approval or by the withdrawal of any approval already granted, may appeal therefrom as if the refusal or withdrawal of approval were a determination and such an appeal shall be heard accordingly.

7. Remoteness

The Commissioner-General's approval for the purposes of this Schedule is not subject to any rule of law against remoteness, and in any case is without prejudice to any such rule.

FIFTH SCHEDULE

[Section 33]

CAPITAL ALLOWANCE FOR BUILDINGS, IMPLEMENTS, MACHINERY AND PLANT, AND PREMIUMS

PART IBUILDINGS

1. Definition of industrial building

(1) In this Part an industrial building means a building or structure in use for the purposes of any electricity, gas, water, inland navigation, transport, hydraulic power, bridge or tunnel undertaking, or any like undertaking of public utility, or is in use for the purposes of any trade which—

(a) is carried on in a mill, factory or like premises;

(b) consists of the manufacture of goods or materials, or their subjection to any process;

(c) consists of the storage of goods or materials to be used in the manufacture or processing of other goods;

(d) consists of the storage of goods on import or for export; or

(e) consists in the working of a mine or well for the extraction of natural deposits.

[Fifth Sch para 1(1) am by Act 11 of 1975.]

(2) For the purposes of this Part, the expression “industrial building” does not, save as provided in sub-paragraphs (3) and (4), include any building or structure in use as, or as part of or ancillary to the purposes of, a dwelling-house, retail shop, showroom, hotel or office, or in use for the purposes of any retail, repair or servicing trade or a trade of a like nature.

[Fifth Sch para 1(2) am by Act 11 of 1973.]

(3) Any building which on first construction after the commencement of this Act is an hotel, or which is an extension made after the commencement of this Act to a building first constructed as an hotel and which is certified by that body of the Government for the time being responsible for the hotel industry as conforming to such standards as it may from time to time prescribe, is an industrial building for the purposes of this Part.

(4) Any building constructed or acquired by a person to provide housing for the purposes of that person's business is an industrial building for the purposes of this Part:

Provided that—

(i) the cost of each housing unit does not exceed twenty thousand kwacha (in this paragraph referred to as low cost housing);

(5) Any building in use for the welfare of employees engaged in the undertakings and trades referred to in sub-paragraph (1) is an industrial building for the purposes of this Part.

(6) This paragraph applies to a part of an undertaking or trade as it applies to an undertaking or trade.

(7) Where a part of a building is an industrial building, and a part is not, and the capital expenditure incurred on the latter part is not more than ten per centum of such expenditure incurred on the whole building, the whole building is an industrial building for the purposes of this Part.

In this Part, a commercial building means a building or structure, or part thereof, which is not an industrial building as defined in paragraph 1, or farm improvement or farm works as defined in the Sixth Schedule, and which is in use for the purposes of any business:

Provided that the construction of such building or structure is completed for first use on or after the 1st April, 1969.

[Fifth Sch para 2 am by Act 11 of 1969.]

3. Initial allowance for industrial buildings

(1) In ascertaining the business profits of a person who, for the purposes of his business, has incurred capital expenditure on the construction of a building intended to be used as an industrial building, or on an addition to or an alteration of an industrial building, a deduction (called an initial allowance) of the percentage of the expenditure incurred, as set out in Part V, is allowed in the charge year in which the said building, addition to or alteration is brought into use as an industrial building.

(2) Capital expenditure amounting to the cost of acquisition is incurred by a person for the purpose of subparagraph (1) where he—

(a) acquires the building from another person who constructed it in the course of his trade; and

(b) is the first user of that building.

4. Wear and tear allowance for buildings

(1) In ascertaining for any charge year the business profits of any person who in that year uses for the purposes of his business an industrial or commercial building which he acquired, constructed, added to or altered, a deduction shall be allowed (called a wear and tear allowance) for each charge year of such use according to the case and at the percentage, as set out in Part V, of the original cost to such person:

Provided that in no case shall the total of all the deductions allowed to such person under this Part exceed the cost to such person of such acquisition, construction, addition or alteration, as the case may be.

(2) Where a building is used by a person as an industrial building for part of a charge year and as a commercial building for another part of the same charge year, that building shall be regarded as used by that person solely as an industrial building for that charge year.

(3) No allowance shall be deductible under this paragraph in ascertaining the business profits of any person for any charge year in respect of any building if at any time during the said charge year that building is used as his usual dwelling place by—

(a) any individual who uses such building for the purposes of the business, or by any individual partner in such business;

(b) any individual who, by reason of his shareholdings, or of his control of shareholdings, in any company or by reason of any partnership interest, is in a position to exercise control, directly or indirectly, over the person or persons using the building for the purposes of the business;

(c) a director of a company using the building for the purposes of its business, who is not a whole time service director thereof.

[Fifth Sch para 4 am by Act 11 of 1969.]

4A. Deduction of improvement allowance

In ascertaining for any charge year the business profits of any person operating in a priority sector or in respect of a priority product, a multi-facility economic zone or industrial park declared under the Zambia Development Agency Act, 2006 which in that year uses for business an industrial or commercial building which the person has constructed, or altered, a deduction shall be allowed (called improvement allowance) for that charge year at a per centum of the original cost to such person as set out in Part V.

(1) Where any building, in respect of which an initial or wear and tear allowance has been or could have been deducted in ascertaining the profits of a person carrying on a business, ceases to belong to that person or permanently ceases to be used by him for the purposes of any business whatsoever, a deduction (called a balancing allowance) shall be allowed in ascertaining the profits of the business for the purposes of which the said building was last used for the charge year of such cessation.

(2) The balancing allowance deductible under sub-paragraph (1) in respect of a building shall be equal to the amount by which any recovery of capital expenditure on that building together with any initial or wear and tear allowance deducted under this Part in respect of that building falls short of the original cost of that building to the person referred to in that sub-paragraph:

Provided that where wear and tear allowance has been deducted for part only of the entire period of ownership or possession of the building by the person who has been allowed the deduction of the said wear and tear allowance, the allowance deductible shall be determined by multiplying the balancing allowance as above calculated by the number of years in respect of which wear and tear allowance has been deducted and dividing the result by the number of years of the said ownership or possession.

(3) In calculating the balancing allowance in respect of any building upon any cessation referred to in sub-paragraph (1), the recovery from capital expenditure on the building shall be the amount which, according to the Commissioner-General's determination, it would have realised in the open market at the time of the cessation.

[Fifth Sch para 5 am by Act 11 of 1969.]

6. Divided use

If any building is used by a person both for the purposes of his business and for other purposes, the amount of any allowance provided by this Part shall be reduced according to the Commissioner-General's determination.

[Fifth Sch para 6 am by Act 11 of 1969.]

PART IIIMPLEMENTS, MACHINERY AND PLANT

7. Business to include employment in this Part

Notwithstanding the definition of “business” as contained in section 2, for the purposes of this Part “business” includes employment and the letting of property.

8. Frequently replaceable articles not within this Part

This Part does not apply to implements requiring frequent replacement.

9. …

[Fifth Sch para 9 rep by Act 11 of 1974.]

10. Wear and tear allowances for implements machinery and plant

(1) Where a person has used any implements, machinery or plant belonging to him for the purposes of his business a deduction (called a wear and tear allowance) shall be allowed in ascertaining the profits of the business for each charge year.

(2) Where a person holds any implements, machinery or plant under a hire-purchase agreement as defined in the Hire-Purchase Actor a finance lease, then the implement, machinery or plant shall be deemed to belong to that person for the purposes of this paragraph.

(3) The wear and tear allowance for any charge year shall be at the percentage and in the cases set out in Part V:

Provided that in the charge year in which the business ceases the allowance shall be the amount of the residue of the original cost referred to in sub-paragraph (4) .

(4) The wear and tear allowance for any charge year shall be calculated on a straight line basis of the original cost of the implements, machinery and plant:

Provided that in the case of any implements, machinery or plant which were acquired by a person other than for the purpose of a business, the original cost shall be the current market value of such implements, machinery or plant as determined by the Commissioner-General in the charge year that they are first used for the purpose of a business.

(5) Notwithstanding any other provisions of this Act to the contrary the wear and tear allowance on any implement, machinery or plant which is proved to the satisfaction of the Commissioner-General to be exclusively and directly used in farming, mineral processing, agro-processing, manufacturing, tourism or leased out under an operating lease for any charge year, shall be calculated on a straight line basis at the rate of fifty per cent of the cost.

(6) Notwithstanding any other provisions of this Act, the wear and tear allowance on the cost of any new plant or machinery acquired and used by any soft drinks manufacturer in respect of such business carried on by him in a rural area, shall, in any charge year, be calculated on a straight-line basis at the rate of twenty per centum of the cost of such plant and machinery.

[Fifth Sch para 10(6) am by Act 14 of 1976, 12 of 1982.]

11. Capital recoveries from implements, machinery and plant

For the purpose of paragraph 10—

(a) a recovery from capital expenditure on implements, machinery or plant shall be deemed to have taken place when the implements, machinery or plant—

(i) permanently cease to be used for the purposes of a business; or

(ii) cease to belong to the person carrying on a business;

(b) the amount of the recovery from capital expenditure shall be the amount which, according to the Commissioner-General's determination, the implements, machinery or plant would have realised in the open market at the time the event giving rise to the recovery occurred.

[Fifth Sch para 11 am by s 17 of Act 11 of 1974.]

12. Divided use

If any implement, machinery or plant is used by a person both for the purposes of his business and for other purposes, the amount of any allowance provided for by this Part shall be reduced to the Commissioner-General's determination.

13. Valuation in exceptional circumstances

(1) In the calculation of any allowance under this Part, the original cost to any person of any implement, machinery or plant that has been—

(a) used outside the Republic by him, and brought by him to the Republic for the purposes of his business;

(b) used by him for a purpose other than the purposes of his business, and is then used for the purposes of his business; or

(c) acquired by him for no valuable consideration; is according to the Commissioner-General's determination.

(2) For the purposes of this Part, the original cost to any person of a road vehicle used for the purposes of his business and the vehicle was acquired by the person after the commencement of this Act, whether the vehicle is a commercial vehicle or otherwise, shall be used in the calculation of the allowance.

(3) In this paragraph, “commercial vehicle” means a road vehicle of a type not commonly used as private vehicle and unsuitable to be used as such but includes all types of road vehicles used solely for hire or carriage of the public for reward.

(1) A deduction is allowed (called a premium allowance) in ascertaining the profits of a person's business equal to the amount of any premium or like consideration paid by him for the right of use of machinery or plant, or for the use of any patent, design, trade mark or copyright, or for the use of other property which the Commissioner-General determines is of a like nature, where such right is used by that person for the purposes of his business.

(2) The amount of any deduction allowed for any charge year under sub-paragraph (1) shall not exceed the amount of the premium or like consideration divided by the number of years for which the right of use is granted.

(3) Where a person acquires any interest in the ownership of property for payment of a premium or like consideration for the right of use of which he has been allowed a deduction under sub-paragraph (1), he ceases to be allowed that deduction as from the date of such acquisition.

PART IVGENERAL PROVISIONS

15. Successions

(1) Where a person succeeds to another person's business, or there is a change in any partnership engaged in business, any property which immediately before the succession or change was in use for the purposes of the business, and, without being sold, is in such use immediately afterwards, is, for the purposes of this Schedule, treated as if it had been sold for an open market price as determined by the Commissioner-General at the time of the succession or change to the person carrying on the business immediately afterwards; but no initial allowance under this Schedule shall be deducted by virtue of this paragraph.

(2) Where there is succession or change in terms of sub-paragraph (1), and notwithstanding that sub-paragraph, the Commissioner-General may, upon the written application of the parties concerned, make such adjustments in relation to the allowances which may be deducted under this Schedule as will provide for the continuity of those allowances in relation to the business the subject of the succession or change, but in any event any such adjustment is subject and according to the Commissioner-General's discretion.

16. Subsidies

For the purposes of this Schedule, the amount of any capital expenditure is reduced by the amount of any subsidy or grant from public funds towards or in aid or in recognition of the object of such expenditure.

17. Controlled sales

(1) This paragraph has effect in relation to the transfer by sale or otherwise of any property in respect of which any deductions have been allowed under Parts I, II and III, where either—

(a) the transferee has control of the transferor, or the transferor has control of the transferee, or some other person has control of both; or

(b) the Commissioner-General determines by reference to the consideration given for the property that the transfer was not at arm's length.

(2) Where any property as is mentioned in sub-paragraph (1) is transferred other than at a price that it would have fetched if sold in the open market, then, subject to sub-paragraph (3), the like consequences shall ensue as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market.

(3) Where the transfer is one to which sub-paragraph (1) (a) applies and the transferee uses the property transferred for the purposes of a business, then, subject to the parties to the transfer by notice in writing to the Commissioner-General so electing, sub-paragraph (2) shall not have effect, but the like consequences shall ensue as would have ensued if the property had been transferred for a sum equal to the residue of capital expenditure on the property still un-deducted immediately before the transfer, and, in the case of such an election—

(a) no initial allowance shall be deducted in respect of the transferee; and

(b) in respect of a subsequent sale or cessation of use of the property for the purposes of the business by the transferee, the amount included in his income as a capital recovery shall be such an amount as would have been included in the transferor's income in a like case but for the transfer, and as if the transferor had been allowed all such deductions in respect of the property as were, in fact, allowed to the transferee.

[Fifth Sch para 17 am by Act 26 of 1970.]

PART VRATES OF INITIAL AND WEAR AND TEAR ALLOWANCES

18. Rates of initial and wear and tear allowances

Under paragraph 3—

initial allowance for industrial buildings ten per centum

Under paragraph 4—

wear and tear allowance for industrial buildings, in the case of low cost housing ten per centum

and for other industrial buildings five per centum

and for commercial buildings two per centum

under paragraph 4A—

improvement allowance for commercial and industrial buildings one hundred per centum;

Under paragraph 10—

Wear and tear for implements, machinery and plant including Commercial Vehicles twenty-five per centum

Wear and tear for vehicles other than Commercial Vehicles twenty per centum

(a) issued ordinary share capital or stock, but only to the extent that such share capital or stock is paid up;

(b) issued, deferred, preferred, preference or other priority share capital or stock, but only to the extent that such share capital or stock is paid up and provided that such share capital or stock carries no rights of early repayment on demand; Interpretation of terms

(c) capital reserves in so far as they are not capable of distribution except either by way of diminution of capital or by addition to issued capital; and

(d) revenue reserves to the extent that they have remained constant throughout the previous twelve months;

“prospecting expenditure” means expenditure incurred in relation to prospecting operations, including, any capital expenditure incurred in connection with such operations, and such expenditure as the Commissioner-General determines to be ancillary to expenditure on prospecting operations;

…

[“1953 new mine” rep by s 19(c)(iii) of Act 1 of 2008 w.e.f. 1 April 2008448.]

…

[“1970 new mine” rep by s 19(c)(iv) of Act 1 of 2008 w.e.f. 1 April 2008449.]

(1) Subject to the other provisions of this paragraph, the amount of prospecting expenditure incurred by a person in a charge year in respect of an area in Zambia over which a mining right has been granted shall be allowed as a deduction to that person.

(2) A company that is entitled may, by notice in writing given to the Commissioner-General within twelve months after the end of the charge year in which the expenditure is incurred, irrevocably elect to forego the deduction in favour of its shareholders; whereupon the deductions shall be allowed, not to the company but to its shareholders instead, in proportion to the calls on shares paid by them during the relevant accounting period or in such other proportions as the Commissioner-General having regard to any special circumstances, may determine:

Provided that this sub-paragraph shall not apply to a company carrying on mining operations in Zambia.

(3) Where—

(a) a company (in this sub-paragraph called “the parent company”) is entitled and under this paragraph to a deduction; and

(b) subsequent to the date the expenditure is incurred, a new company, of which the parent company is a shareholder, is incorporated for the purpose of—

(i) continuing the prospecting operations of the parent company; or

(ii) carrying on mining operations in the Republic; and the parent company may, by notice in writing given to the Commissioner-General within twelve months after the incorporation of the new company, irrevocably elect to forego the deduction in favour of the new company but to the new company instead:

Provided that this sub-paragraph shall not apply—

(i) to a company carrying on mining operations in Zambia; or

(ii) in respect of expenditure incurred after the new company takes over the prospecting operations of the parent company or commences to carry on mining operations.

(4) A deduction allowable under this paragraph shall be deemed to be a loss and shall be allowed, in accordance with section 30 of the Income Tax Act as a loss incurred—

(a) in the case of sub-paragraphs (1) and (2), in the charge year in which the expenditure is incurred; and

(b) in the case of sub-paragraph (3), in the charge year in which the new company takes over the prospecting or exploration operations or commences to carry on mining operations.

(5) In computing a loss incurred by the operator of a mine in any charge year, prospecting expenditure incurred in relation to the mine and allowable as a deduction shall be deemed to be deducted last.

(1) Subject to the other provisions of this paragraph and the provisions of paragraph (5), a deduction shall be allowed in determining the gains or profits from carrying on of mining operations by any person in charge year in respect of the capital expenditure incurred by the person on a mine which is in regular production in the charge year.

(2) The deduction to be allowed for a charge year for a mine shall be twenty-five percent of the original expenditure to the extent that equipment, plant, machinery or anything related to capital expenditure as defined under paragraph 19 of this Part is brought into use in the carrying out of mining operations and the expenditure has not already been allowed as a deduction.

(3) Where separate and distinct mining operations are carried on by a person in mines which are not contiguous, the deduction allowable under subparagraph (2) shall be calculated separately according to the respective mines:

(8) A deduction shall be allowed in ascertaining gains or profits of a person involved in mining operations in respect of actual costs incurred by way of restoration and rehabilitation works or amounts paid into the Environmental Protection Fund pursuant to section 122 of the Mines and Minerals Development Act, 2008.

Where at any time in any charge year a company has outstanding loans which in aggregate exceed an amount equal to more than thrice the equity of the company at that time, any interest on borrowings which may be allowed in any charge year shall not include any amount of interest paid in that year in respect of so much of the borrowings in that year as exceed that amount; and where there is more than one loan, interest on borrowings taken out earlier shall be allowed in priority to interest on later borrowings.

(1) Where a person is carrying on mining operations in amine which is in regular production and is also the owner of, or has a right to work a mine which is not contiguous with the producing mine and from which the person has a loss in the charge year, the amount of such loss shall not be deducted in ascertaining the gains or profits from the mining operations:

Provided that the loss incurred may be allowed as a deduction in ascertaining the gains or profits arising from the same mine when it commences regular production.

(2) The provisions of subparagraph (1) shall not apply to any existing mine.

Where a mine ceases regular production due to the expiration of the life of the mine, or where the mining right has ended, or for any other reason acceptable to the Commissioner-General, and the person who was carrying on the mining operations irrevocably so elects, by notice in writing to the Commissioner-General, within twelve months after the end of the charge year in which the mine ceased regular production, the deduction allowable in ascertaining the gains or profits from the carrying on of the mining operations in respect of the capital expenditure on the mine for each of the last six charge years in which the mine was in regular production shall be an amount arrived at by taking the sum of—

(a) the unredeemed capital expenditure on the mine at the commencement of the six charge years; and

(b) the capital expenditure on the mine incurred in the six charge years; and dividing the sum so obtained by six.

Subject to the provisions of paragraph 26, when change in the ownership of a mine takes place, the consideration for the assets which qualify, for the purposes of this Part, as capital expenditure shall, for income tax purposes—

(a) be allowable as capital expenditure incurred by the new owner; and

(b) be deemed to be a capital recovery by the previous owner in the charge year in which the change takes place.

(1) Whenever there is a change in the ownership of a mine, this paragraph shall have effect in relation to the sale of any property in respect of which any deductions have been allowed under this Schedule in any case where either—

(a) the buyer has control of the seller, or the seller has control of the buyer, or some other person has control of both; or

(b) the Commission-General determines, by reference to the consideration given for the property, that the same was not at arm's length.

(2) Where the property is sold at a price other than what it would have fetched if sold in the open market, then, subject to the provisions of sub-paragraph (3), the same consequences shall ensue as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market.

(3) Where the sale is one to which clause (a) of sub-paragraph (1) applies and the parties to the sale irrevocably so elect, by notice in writing to the Commissioner-General, then sub-paragraph (2) shall not have effect but, instead, the same consequences shall ensue as would have ensued if the property had been sold for a sum equal to the residue of capital expenditure on the property still unredeemed immediately before the sale.

(2) The Minister may, by statutory instrument, make provisions regulating deductions in connection with petroleum operations.

[Fifth Sch para 27 am by Act 11 of 1985.]

SIXTH SCHEDULE

[Section 33]

FARMING IMPROVEMENT AND WORKS ALLOWANCES AND LIVESTOCK VALUATION

PART IFARM IMPROVEMENT ALLOWANCE

1. Definitions

In this Part—

“farm dwelling” means a permanent building, used as a dwelling (the original cost of which is taken for the purposes of this Part as not in excess of twenty thousand kwacha), which is not used by the farmer claiming the allowance under this Part as the homestead of himself and his family; and

“farm improvement” means any permanent work, including a farm dwelling and fencing appropriate to farming and any building constructed for and used for the welfare of, employees, and in relation to farming land owned or occupied by the farmer claiming the allowance under this Part for ascertainment of his profit.

[Sixth Sch para 1 am by Act 6 of 1980, 14 of 1987, 2 of 1995.]

NOTE:

Restriction of cost under the definition of “farm dwelling” has been as follows—

K

with effect from 1st April, 1966

6,000

with effect from 1st April, 1980

8,000

with effect from 1st April, 1987

20,000

with effect from 1st April, 1995

200,000

with effect from 1st April, 1996

1,000,000

2. Farm improvement allowance

For any expenditure incurred in a charge year on farm improvements, a deduction called improvement allowance shall be allowed in determining the profits of the farming business for the charge year.

Where the expenditure referred to in paragraph 2 partly in respect of a farm improvement, and partly in respect of some other purposes, only such proportion of that expenditure as the Commissioner-General may determine is taken into account for the purposes of that paragraph.

The deduction under this Part (called the farm works allowance) is allowed to a farmer in respect of expenditure on farming land in his ownership or occupation and for the purposes of farming, on stumping and clearing, works for the prevention of soil erosion, boreholes, wells, aerial and geophysical surveys, and water conservation (in this Part collectively referred to as “farm works”) .

6. Farm works allowance

The expenditure incurred by any person for any charge year in respect of any farm works is allowed as a deduction in ascertaining the profits of his farming business for that year:

Provided that where the person incurs the expenditure in a charge year prior to the charge year in which he commences farming operations the expenditure shall be allowed as a deduction in the charge year in which he commences farming operations.

[Sixth Sch para 6 am by Act 26 of 1970.]

PART IIIVALUATION OF LIVESTOCK

7. Standard value

(1) In ascertaining a farmer's gains or profits the value of his livestock (other than livestock bought by him for stud) is the standard value or if he so irrevocably elects, whichever is the lower of the market value or the cost to him of the livestock.

(2) The standard value for the purposes of this paragraph applicable to any class of livestock shall be that adopted by the farmer in the first return delivered by him after he commences farming, if the Commissioner-General determines that such value may be approved and that standard value shall not be varied for the purposes of any subsequent charge year unless the Commissioner-General so determines, and subject to any conditions he may impose on such determination.

(3) For the purpose of this paragraph and paragraph 7 of the First Schedule the value of livestock bought for stud shall be the cost price or market value whichever is the lower.

[Sixth Sch para 7 am by Act 14 of 1987, 17 of 1988.]

PART IVGENERAL PROVISIONS

8. Subsidies

For the purposes of this Schedule the amount of any capital expenditure incurred in respect of farm improvement to which Part I applies for expenditure incurred in respect of farm works to which Part II applies is reduced by the amount of any subsidy or grant from public funds towards or in aid or in recognition of the object of such expenditure.

In this Schedule, “trustee” means the person, by whatever name called, having the management or control of a scheme which is or was an approved share option scheme.

2. —

(1) Where any scheme is established by or on behalf of an employer under which some or all of the employees (including Directors) or such employer become entitled to acquire shares or an interest in shares in the issued or of some other entity specified in sub-paragraph (2)(b)(i), an application may be made for that scheme to be approved by the Commissioner-General.

(2) The Commissioner-General shall approve any share option scheme if satisfied that the constitution (whether by trust deed or otherwise) and rules relating to the scheme have as their main objective the entitlement to acquire shares or an interest in shares as described in sub-paragraph (1), and that the entitlement is, for a set number of shares, at a fixed price, for a specific type of share and during a set period of times:

Provided that—

(a) the scheme is established in the Republic by or on behalf of an employer carrying on business wholly or partly within the Republic and employees who are citizens or permanent residents of the Republic regardless of the place where the duties of that employment are performed; and

(b) the constitution and rules—

(i) provide for the participation by all employees of the employer meeting clearly defined criteria or all employees of designated holding or subsidiary companies of the employer or other business enterprises which the Commissioner-General accepts as being closely affiliated with the employer in accordance with Act;

(ii) restricts the criteria for participation so as to exclude employees who are not individuals or have not worked for the employer or entities specified in item (i) for a minimum of twenty hours per week during the period of two years to eligibility, or for at least five months as seasonal full-time personnel during such period;

(iii) restrict the criteria for participation so as to limit the total number of shares or interests in shares to be acquired under the scheme by any one employee to one-fifth of all of the shares and interests in shares issued or required to be issued in terms of the scheme;

(iv) require that, on becoming eligible for participation, all employees are advised by the employer in writing, of their eligibility, of the constitution and rules of the scheme, of the results of the scheme over the last ten financial years of operation or since inception if the scheme has been established for less than ten years and, of the pricing formula and period over which the option may be exercised, and of the risk and benefits associated with participation in such schemes in general and the employer's scheme in particular, except that the price of the shares shall be fixed at the time the option is given and the price shall not be less than the market value of the shares at that time, and only ordinary shares of the company may participate in the scheme;

(v) require that all shares and interests in shares acquired through the scheme are registered, with the details of the prices at which shares and interests in shares are issued, exercised, sold or relinquished whether by effluxion of time or otherwise;

(vi) require that all administrative and other expenses of the scheme are borne by the employer, and that the scheme shall be independently audited by the auditors or independent accountants who examine or report on the financial statements of the employer;

(vii) require that eligibility for participation in the scheme and extent of that participation shall be on the basis of the period of service with the employer or other entities specified in item (i), basic emoluments over a defined period, termination of service benefits from employer or other entities specified in item (i) or a combination of some or all of these criteria which shall apply equally to all employees who are in the service of the employer and are not on notice by either party for termination of service at the date eligibility arises except to the extent that the rules of the scheme permit accrued or other terminal benefits to be applied for participation in the scheme;

(viii) require that in the case of a scheme which provides for acquisition of shares or interests in shares in a private company notice of intent to sell or relinquish such shares or interests in shares shall be deemed to be given by an employee participating in the scheme on termination of service or on death, and that any amount unpaid in respect of the acquisition price of such shares or interests in shares, shall be recoverable by the trustees from the sale proceeds, but not exceeding that amount in the event of death;

(ix) require the trustees and the employer to act as taxpayer agent for an employee participating in the scheme for all matters connected with the scheme including the taxation of proceeds of shares or interests in shares sold or otherwise disposed of by employees participating in the scheme;

(x) provide that the scheme may be terminated at the instigation of an employer where shares and interests in shares held by employees participating in the scheme are the subject of unconditional arrangements for sale by participants at fair market value as certified by the auditor of the scheme and the employer;

(xi) do not prevent an employee participating in the scheme from selling the employees shares on the basis of the price formula detailed herein after five years from acquisition of such shares or interests in shares, except where the date of termination of service with the employer or of the death of the employee in the course of the realisation of that employee's estate is earlier;

(xii) do not provide for the issue to or acquisition by employees of shares as interests in shares conveying a preference as to dividends unless such shares participate in dividends declared on ordinary shares in the same entity in excess of the level of such preference and confer rights of participation on dissolution or redemption no less favourable than the rights attributable to holders of such ordinary shares or interests therein;

(xiii) do not require any participating employee to contribute additional amounts beyond amounts determinable in terms of the constitution and rules at the date of the employee agreeing to participate in the scheme;

(xiv) do not permit the rules or constitution to be amended in a manner detrimental to employees participating in the scheme without the consent of the trustees, and without confirmation from the Commissioner-General;

(xv) do not permit the granting of credit for any amount towards financing the exercise of an option to acquire shares.

3. —

(1) In this Schedule “employee” or “employer” includes any employee or employer specified in paragraph 2 (2)(b)(i) except that as regards provision of financial information where an option scheme extends to holding or subsidiary companies or affiliates financial information shall be provided only to employees participating in the scheme or to employees eligible to participate in the scheme in respect of a company in which they are or will be entitled to acquire shares or interests in shares and that the auditors required in terms of paragraph 2 (2) (b) (vi) shall apply to the employer who undertakes the administration of the fund or its procurement and, if more than one, to such employer having the largest number of participants in the scheme.

(2) In this Schedule “shares” means any shares issued by a company duly incorporated under the written laws of the Republic or elsewhere conveying rights to an undivided share of its distributable profits and proceeds arising on dissolution or winding-up of such company and “interest in shares” means an employee's entitlement to shares held by or on behalf of such a scheme and to the employee's right, if any, to exercise an option to acquire shares.

4. —

(1) An application for approval of any share option scheme under paragraph 2, may be made by trustees of the scheme or a sponsoring employer prior to appointment of such trustees in writing to the Commissioner-General; and the application shall be accompanied by a copy of the instrument constituting the scheme and of the rules relating to the scheme.

(2) Within one month of submission of any application referred to in sub-paragraph (1), the Commissioner-General shall inform the applicant in writing of approval or rejection of the share option scheme and of the charge year in relation to which it is approved.

(3) Where any share option scheme has been approved by the Commissioner-General under sub-paragraph (2) for any charge year, the scheme shall be deemed to be approved for each subsequent charge unless the Commissioner-General withdraws approval under sub-paragraph (5) .

(4) Where there is any alteration to the instrument constituting any share option scheme approved by the Commissioner-General under this Schedule or to any rules relating to any such scheme, the trustee of the scheme shall forthwith inform the Commissioner-General in writing of the alteration; and, if the Commissioner-General is not so informed, the approval of the scheme shall be deemed to have been suspended as from the date of the alteration.

(5) The Commissioner-General shall at any time by notice in writing withdraw approval of any share option scheme if satisfied that—

(a) the conditions set out in paragraph 2 on which the approval of the scheme was granted have not been complied with; or

(b) there has been any alteration to the instrument constituting the scheme or to any rules relating to it resulting in the noncompliance with the conditions set out in paragraph 2.

(6) In the event of suspension or withdrawal of approval in respect of a share option scheme the Commissioner-General shall ensure, as far as practical that employees participating in the scheme not prejudiced as regards transactions they have irrevocably committed themselves to prior to receiving notification of such suspension or withdrawal.

5. —

Where under this Schedule the Commissioner-General rejects an application to approve a share option scheme, or suspends or withdraws approval from any scheme, any person aggrieved by the refusal of the Commissioner-General to grant approval or by the suspension or withdrawal of any approval, may appeal therefrom as if the refusal or suspension or withdrawal of approval were a determination of the Commissioner-General under this Act.

(h) the rehabilitation care or counselling of persons addicted to a dependence forming substance or the provision of preventative and education programmes regarding addiction to a dependence forming substance;

(i) conflict resolution, the promotion of reconciliation, mutual respect and tolerance among the various people of Zambia;

(j) the promotion or advocacy of human rights and democracy;

(k) the protection of the safety of the general public;

(l) the promotion or protection of family stability;

(m) the provision of legal services for poor and needy persons;

(n) the provision of facilities or the protection and care of children under school going age or poor and needy parents;

(o) the promotion or protection of the rights and interests of, and the care of, asylum seekers and refugees;

(p) community development for poor and needy persons and poverty eradication initiatives, including—

(i) the promotion of community based projects relating to self-help, empowerment, capacity building, skills development or poverty eradication;

(ii) the provision of training support or assistance to community based projects contemplated in clause (i); or

(iii) the provision of training, support or assistance to emerging micro enterprises to improve capacity to start and manage a business, which may include the granting of loans on such conditions as may be prescribed by the Minister by way of statutory instrument; or

(q) the promotion of access to media and a free press.

2. Health Care

(a) the provision of equipment or other aids used by persons with a physical disability, without the recovery of cost;

(b) the provision of health care services to poor and needy persons;

(c) the care or counselling of terminally ill persons or persons with a physical or mental disability and the counselling of their families in this regard;

(d) the prevention of HIV infection and the provision of preventative and education programmes relating to HIV/ AIDS;

(e) the care, counselling or treatment of persons afflicted with HIV/AIDS, including the care or counselling of their families and dependants in this regard;

(f) the provision of blood transfusion, organ donation or similar services;

(g) the provision of primary health care, education, sex education or family planning;

(h) the prevention of malaria and programmes aimed at the eradication of malaria;

(i) the prevention of tuberculosis and leprosy infection and the provision of preventative and education programmes relating to tuberculosis and leprosy; or

(j) the care, counselling or treatment of cancer patients including the counselling of their families and dependants.

3. Land and Housing

(a) the provision of residential care for retired persons, where—

(i) more than ninety per centum of the persons to whom the residential care is provided are over the age of sixty years and nursing services are provided by the organisation carrying on such activity; and

(ii) residential care for persons who are poor and needy is actively provided by that organisation without the recovery of cost;

(b) building and equipping of—

(i) clinics or day care nursery; or

(ii) community centres, sport facilities or other facilities of a similar nature for the benefit of the poor, needy and persons with a physical disability;

(c) construction of low cost housing for poor and needy persons without the recovery of cost; or

(d) the promotion, facilitation and support of access to land and use of land, housing and infrastructural development for promoting official land reform programmes.

4. Education and Development

(a) the provision of education by a government school or grant (Cap. 134) aided school as defined in the Education Act;

(b) the provision of higher education by an institution excluding a private institution as defined in terms of the Technical Education, Vocational and Entrepreneurship Training Act 13, 1998 or a public university as defined by the University Act, 1999; Act 11of 1999

(j) the provision of scholarships, bursaries and awards for study, research and teaching on such conditions as may be prescribed by the Minister, by statutory instrument.

5. Religion

The promotion or practice of religious or ecclesiastical activities hat encompass acts of worship, witness, teaching and community service.

6. Culture

(a) the advancement, promotion or preservation of art, culture or customs;

(b) the promotion, establishment, protection, preservation or maintenance of areas, collections or buildings of historical or cultural interest, national monuments, national heritage sites, museums, including art galleries, archives and libraries; or

(c) the provision of youth leadership or development programmes.

7. Conservation, Environment and Animal Welfare

(a) the conservation, rehabilitation or protection of the natural environment, including flora, fauna or the biosphere;

(b) the care of animals, including the rehabilitation, or prevention of the ill treatment of animals;

(c) the promotion of, and education and training programmes relating to environment awareness, greening, clean up or sustainable development projects;

(d) the establishment and management of a trans frontier area, involving two or more countries, which

(i) is or will fall under a unified or co-ordinated system of management without compromising national sovereignty; and

(ii) is established with the explicit purpose of supporting the conservation of biodiversity, job creation and free movement of animals and tourists across the international boundaries.

Provided that the refund of employer's contribution from a defined contributory pension fund or scheme and defined benefit fund or scheme shall be taxed in accordance with clauses (b), (c), (d), (e) and (f) of this subparagraph.

(e) on the balance of so much of an individual’s income as exceeds forty-five kwacha and 60 ngwee but does not exceed seventy million, eight hundred thousand kwacha at the rate of thirty-five per centum per annum; and

(1A) Notwithstanding sub-paragraph (1) and subject to the other provisions of this Act, tax in respect of the income of an individual for the charge year ending 31st December, 2012, shall be charged as follows:

(a) on income received by way of lump sum payment, under section 82, at the rate of ten percent:

Provided that the refund of employer’s contribution from a defined contributory pension fund or scheme and defined benefit fund or scheme shall be taxed in accordance with clauses (b), (c), (d), (e) and (f);

(b) on any income falling within sub-section (5) of section 21 which is not exempt from tax under that sub-section, at the rate of ten percent;

(c) on the balance of so much of an individual’s income as does not exceed eighteen thousand kwacha, at the rate of zero percent;

(d) on the balance of so much of an individual's income as exceeds eighteen thousand kwacha, but does not exceed twenty-five thousand, two hundred kwacha at the rate of twenty-five percent;

(e) on the balance of so much of an individual’s income as exceeds twenty-five thousand, two hundred kwacha, but does not exceed fifty-one million, three hundred thousand kwacha, at the rate of thirty percent; and

(f) on the balance of so much of an individual’s income as exceeds fifty-one thousand, three hundred kwacha at the rate of thirty-five percent.

(2A) Notwithstanding sub-paragraph (2), in the charge year ending 31st December, 2012, where a person receives income by way of gratuity under sub-section (1) of section 21, the gratuity shall be charged as follows:

(a) income not exceeding the amount set out in clause (c) of sub-paragraph (1A) of this paragraph shall be exempt; and

(b) the balance of so much of an individual’s income as exceeds the income specified in clause (i), at the rate of twenty-five percent.

(1) Subject to the other provisions of this Act, tax in respect of the income of a person other than the income of an individual, a trust, deceased's estate or a bankrupt's estate for a charge year, shall be charge as follows:

(a) on the income of any company whose shares are listed on the Lusaka Stock Exchange in the first year of its listing at the rate of two per centum below the rates specified—

(i) in clauses (b), (c), (d) and (e) of this subparagraph; and

(ii) in clauses (b), (c) and (d) of paragraph 5:

Provided that—

A. Any company whose shares were listed on the Lusaka Stock Exchange prior to 1st April, 2004 shall not qualify for the tax incentive referred to in this clause; and

B. Where any company, whose shares are listed on the Lusaka Stock Exchange on or after 1st April, 2004, offers and sells one third of its shares to indigenous Zambians, the income of that company shall be charged at an additional rate of five per centum below the rates specified—

Subject to the provisions of this Act, tax in respect of the income of a trust, a deceased's estate or a bankrupt's estate for charge year shall be charged at the rate of thirty-five per centum per annum.

(a) the tax chargeable on income received from a rural enterprise shall be reduced, for each of the first five charge years for which that business is carried on, by such amount as equal to one-seventh of the tax which would otherwise be chargeable on that income;

(b) the maximum rate for income received from farming and agro-processing shall be ten per centum per annum;

Provided that the foreign earnings of Sun International Limited, in relation to a Development Agreement executed on the 22nd September, 1999, shall be deemed as income originating from the export of non-traditional products;

and for the purposes of this sub-paragraph “foreign earnings” means the total income generated by Sun International Limited from non-Zambian residents through its operations and shall be calculated as a percentage of rooms revenue by non-Zambians compared to total rooms revenue in each year; the percentage reached shall then be applied to the total earnings by Sun International Limited, to compute foreign earnings;

(e) on the income of a business enterprise approved by the Zambia Development Agency and carrying on manufacturing activities in a rural area, a multifacility economic zone or an industrial park tax shall be charged at zero percent for a period of five years starting from the year of commencement of operations of the approved investment;

(f) tax to be deducted from any dividend declared by a business enterprise approved by the Zambia Development Agency and carrying on manufacturing activities in a rural area, a multifacility economic zone or industrial park shall be at the rate of zero percent per annum for a period of five years starting fromthe year of commencement of operations of the approved investment;

(i) tax required to be deducted from any payment of interest arising from savings or deposit accounts held with financial institutions to an individual under section 82A shall be deducted at the rate of zero percent per annum;

(ii) tax required to be deducted from any payment of interest, other than interest arising from savings or deposit accounts held with financial institutions to an individual under section 82A shall be deducted at the rate of fifteen percent per annum and shall be the final tax;

(iii) tax required to be deducted from payment of interest on Treasury Bills and Government Bonds to any public benefit organisation, body, person or trust exempted under subparagraph (1) of paragraph 5 and subparagraph (1) of paragraph 6 of the Second Schedule shall be the final tax; and

Any reference in this Act or in any other document to any provision of the Charging Schedule as it had effect immediately before the coming into operation of the Income Tax (Amendment) Act, 1999 shall be construed as a reference to the corresponding provision of this Schedule as it has effect thereafter.